Effects of Federal Policies on

Extracorporeal Shock Wave Lithotripsy

May 1986

NTIS order #PB86-217999
HEALTH TECHNOLOGY CASE STUDY 36

Effects of Federal Policies on

Extracorporeal Shock Wave Lithotripsy

MAY 1986

This case study was performed as part of OTA’s Assessment of

Payment for Physician Services: Strategies for Medicare

Washington D C 20510

, !,

, .- ‘ 1,
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For sale by the Superintendent of Documents

U.S. Government Printing Office, Washington, DC 20402
Preface

Effects of Federal Policies on Extracorporeal

Shock Wave Lithotripsy is Case Study 36 in

OTA’S Health Technology Case Study Series. This

case study has been prepared in connection with

OTA’S project on Payment for Physician Services: Strategies for Medicare, which was mandated

by the Deficit Reduction Act of 1984. The House

Committees on Ways and Means and Energy and

Commerce and the Senate Committee on Finance

have jurisdiction over that part of the law. The

Senate Special Committee on Aging also requested

the study of physician payment.

OTA case studies are designed to fulfill two

functions. The primary purpose is to provide

OTA with specific information that can be used

in forming general conclusions regarding broader

policy issues. The first 19 cases in the Health Technology Case Study Series, for example, were conducted in conjunction with OTA’s overall project

on The Implications of Cost-Effectiveness Analysis of Medical Technology. By examining the 19

cases as a group and looking for common problems or strengths in the techniques of cost-effectiveness or cost-benefit analysis, OTA was able

to better analyze the potential contribution that

those techniques might make to the management

of medical technology and health care costs and

quality.

The second function of the case studies is to

provide useful information on the specific technologies covered. The design and the funding levels of most of the case studies are such that they

should be read primarily in the context of the associated overall OTA projects. Nevertheless, in

many instances, the case studies do represent extensive reviews of the literature on the efficacy,

safety, and costs of the specific technologies and

as such can stand on their own as a useful contribution to the field.

Case studies are prepared in some instances because they have been specifically requested by

congressional committees and in others because

they have been selected through an extensive review process involving OTA staff and consultations with the congressional staffs, advisory panel

to the associated overall project, the Health Program Advisory Committee, and other experts in

various fields. Selection criteria were developed

to ensure that case studies provide the following:

● examples of types of technologies by function (preventive, diagnostic, therapeutic, and

rehabilitative);

examples of types of technologies by physical nature (drugs, devices, and procedures);

examples of technologies in different stages

of development and diffusion (new, emerging, and established);

examples from different areas of medicine

(e.g., general medical practice, pediatrics,

radiology, and surgery);

examples addressing medical problems that

are important because of their high frequency or significant impacts (e. g., cost);

examples of technologies with associated high

costs either because of high volume (for lowcost technologies) or high individual costs;

examples that could provide information material relating to the broader policy and methodological issues being examined in the

particular overall project; and

examples with sufficient scientific literature.

case studies are either prepared by OTA staff, . -

commissioned by OTA and performed under contract by experts (generally in academia), or written by OTA staff on the basis of contractors’

papers.

OTA subjects each case study to an extensive

review process. Initial drafts of cases are reviewed

by OTA staff and by members of the advisory

panel to the associated project. For commissioned

cases, comments are provided to authors, along

with OTA’s suggestions for revisions. Subsequent

drafts are sent by OTA to numerous experts for

review and comment. Each case is seen by at least

30 reviewers, and sometimes by 80 or more outside reviewers. These individuals may be from

relevant Government agencies, professional societies, consumer and public interest groups, medical practice, and academic medicine. Academicians such as economists, sociologists, decision

analysts, biologists, and so forth, as appropriate,

also review the cases.

Although cases are not statements of official

OTA position, the review process is designed to

satisfy OTA’s concern with each case study’s

scientific quality and objectivity. During the various stages of the review and revision process,

therefore, OTA encourages, and to the extent possible requires, authors to present balanced information and recognize divergent points of view.
Health Technology Case Study Seriesa

Case Study Case study title; author(s); Case Study Case study title; author(s);

Series No. OTA publication numberb

Series No. OTA publication numberb

1 Formal Analysis, Policy Formulation, and End-Stage Renal

Disease;

Richard A. Rettig (OTA-BP-H-9(1))C

2 The Feasibility of Economic Evaluation of Diagnostic Procedures: The Case of CT Scanning;

Judith L. Wagner (OTA-BP-H-9(2))

3 Screening for Colon Cancer: A Technology Assessment;

David M. Eddy (OTA-BP-H-9(3))

4 Cost Effectiveness of Automated Multichannel] Chemistry

Analyzers;

Milton C. Weinstein and Laurie A. Pearlman

(OTA-BP-H-9(4))

5 Periodontal Disease: Assessing the Effectiveness and Costs of

the Keyes Technique;

Richard M. Scheffler and Sheldon Rovin

(OTA-BP-H-9(5))

6 The Cost Effectiveness of Bone Marrow Transplant Therapy

and Its Policy Implications;

Stuart O. Schweitzer and C. C. Scalzi (OTA-BP-H-9(6))

7 Allocating Costs and Benefits in Disease Prevention Programs:

An Application to Cervical Cancer Screening;

Bryan R. Luce (Office of Technology Assessment)

(OTA-BP-H-9(7))

8 The Cost Effectiveness of Upper Gastrointestinal Endoscopy;

Jonathan A. Showstack and Steven A. Schroeder

(OTA-BP-H-9(8))

9 The Artificial Heart: Cost, Risks, and Benefits;

Deborah P. Lubeck and John P. Bunker

(OTA-BP-H-9(9))

10 The Costs and Effectiveness of Neonatal Intensive Care;

Peter Budetti, Peggy McManus, Nancy Barrand, and

Lu Ann Heinen (OTA-BP-H-9(1O))

11 Benefit and Cost Analysis of Medical Interventions: The Case

of Cimetidine and Peptic Ulcer Disease;

Harvey V. Fineberg and Laurie A. Pearlman

(OTA-BP-H-9(11))

12 Assessing Selected Respiratory Therapy Modalities: Trends and

Relative Costs in the Washington, D.C. Area;

Richard M. Scheffler and Morgan Delaney

(OTA-BP-H-9(12))

13 Cardiac Radionuclide Imaging and Cost Effectiveness;

William B. Stason and Eric Fortess (OTA-BP-H-9(13))

14 Cost Benefit/Cost Effectiveness of Medical Technologies: A

Case Study of Orthopedic Joint Implants;

Judith D. Bentkover and Philip G. Drew (OTA-BP-H-9(14))

15 Elective Hysterectomy: Costs, Risks, and Benefits;

Carol Korenbrot, Ann B. Flood, Michael Higgins,

Noralou Roos, and John P. Bunker (OTA-BP-H-9(15))

16 The Costs and Effectiveness of Nurse Practitioners;

Lauren LeRoy and Sharon Solkowitz (OTA-BP-H-9(16))

17 Surgery for Breast Cancer;

Karen Schachter Weingrod and Duncan Neuhauser

(OTA-BP-H-9(17))

18 The Efficacy and Cost Effectiveness of Psychotherapy;

Leonard Saxe (Office of Technology Assessment)

(OTA-BP-H-9(18)) d

available for sale by the Superintendent of Documents, U.S. Government

Printing Office, Washington, DC, 20402, and by the National Technical

Information Service, 5285 Port Royal Rd., Springfield, VA, 22161 Call

OTA’S Publishing Office (224-8996) for availability and ordering information,

b Original publication numbers appear in parentheses.

cThe first 17 cases in the series were 17 separately issued cases in Background

Paper #2: Case Studies of Medical Technologies, prepared in conjunction

with OTA’S August 1980 report The lmplications of Cost-Effectiveness Analysis of Medical Technology,

19

20

21

22

23

24

25

26

27

28

29

30

31

32

33

34

35

36

Assessment of Four Common X-Ray Procedures;

Judith L. Wagner (OTA-BP-H-9(19))e

Mandatory Passive Restraint Systems in Automobiles: Issues

and Evidence;

Kenneth E. Warner (OTA-BP-H-15(20))f

Selected Telecommunications Devices for Hearing-Impaired

Persons;

Virginia W. Stern and Martha Ross Redden

(OTA-BP-H-16(21)) g

The Effectiveness and Costs of Alcoholism Treatment;

Leonard Saxe, Denise Dougherty, Katharine Esty,

and Michelle Fine (OTA-HCS-22)

The Safety, Efficacy, and Cost Effectiveness of Therapeutic

Apheresis;

John C. Langenbrunner (Office of Technology Assessment)

(OTA-HCS-23)

Variation in Length of Hospital Stay: Their Relationship to

Health Outcomes;

Mark R. Chassin (OTA-HCS-24)

Technology and Learning Disabilities;

Candis Cousins and Leonard Duhl (OTA-HCS-25)

Assistive Devices for Severe Speech Impairments;

Judith Randal (Office of Technology Assessment)

(OTA-HCS-26)

Nuclear Magnetic Resonance Imaging Technology: A Clinical,

Industrial, and Policy Analysis;

Earl P. Steinberg and Alan Cohen (OTA-HCS-27)

Intensive Care Units (ICUs): Clinical Outcomes, Costs, and

Decisionmaking;

Robert A. Berenson (OTA-HCS-28)

The Boston Elbow;

Sandra J. Tanenbaum (OTA-HCS-29)

The Market for Wheelchairs: Innovations and Federal Policy;

Donald S. Shepard and Sarita L. Karen (OTA-HCS-30)

The Contact Lens Industry: Structure, Competition, and Public

Policy;

Leonard G. Schifrin and William J. Rich (OTA-HCS-31)

The Hemodialysis Equipment and Disposable Industry;

Anthony A. Romeo (OTA-HCS-32)

Technologies for Managing Urinary Incontinence;

Joseph Ouslander, Robert Kane, Shira Vollmer, and Melvyn

Menezes (OTA-HCS-33)

The Cost Effectiveness of Digital Subtraction Angiography in

the Diagnosis of Cerebrovascular Disease;

Matthew Menken, Gordon H. DeFriese, Thomas R. Oliver,

and h-win Litt (OTA-HCS-34)

The Effectiveness and Costs of Continuous Ambulatory

Peritoneal Dialysis (CAPD)

William B. Stason and Benjamin A. Barnes (OTA-HCS-35)

Effects of Federal Policies on Extracorporeal Shock Wave

Lithotripsy

Elaine J. Power (Office of Technology Assessment)

(OTA-HCS-36)

dBackground Paper #3 to The Implications of Cost-Effectiveness Analws of

Medical Technology.

eBack~ound paper #5 to The Implications of Cost-Effectiveness Analyw of

Medical Technology,

fBac&-ound paper #l to OTA’S May 1982 report Technology and Handlcapp~ People .-

gBackground Paper +2 to Technology and Handicapped People.

iv
OTA Project Staff for Case Study #36

Effects of Federal Policies on Extracorporeal Shock Wave Lithotripsy

Roger C. Herdman, Assistant Director, OTA

Health and Life Sciences Division

Clyde J. Behney, Health Program Manager

Jane E. Sisk, Project Director

Elaine J. Power, Study Director

Charles L. Betley, Research Assistant

Virginia Cwalina, Administrative Assistant

Diann G. Hohenthaner, P.C. Specialist

Carol A. Guntow, Secretary/Word Processor Specialist

Contractors

Jonathan A Showstack, University of California, San Francisco

Eliseo J. Perez-Stable, University of California, San Francisco

Eric Sawitz, University of California, San Francisco
Advisory Panel—Payment

Strategies for Medicare

President, Mi

John R, Ball

American College of Physicians

Washington, DC

Thomas L. Beauchamp

Kennedy Institute of Ethics

Georgetown University

Washington, DC

Karen Davis

Department of Health Policy and

Management

School of Hygiene and Public Health

Johns Hopkins University

Baltimore, MD

Richard C. Dever

Fellow and Governor at Large for Florida

American College of Surgeons

Jacksonville, FL

Joseph Eichenholz

Affiliated Businesses Group

CIGNA Corp.

Hartford, CT

Peter D. Fox

Lewin & Associates

Washington, DC

Jack Hadley

Center for Health Policy Studies

Georgetown University

Washington, DC

Ronald E. Henderson

Physician (private practice)

Birmingham, AL

Jack A. Meyer

Health Policy Studies

American Enterprise Institute

Washington, DC

Janet B. Mitchell

Health Economics Research

Chestnut Hill, MA

for Physicians' Services:

Sidney S. Lee, Chair

bank Memorial Fund, New York, NY

Vita R. Ostrander

American Association of Retired Persons

Washington, DC

Thomas O. Pyle

Harvard Community Health Plan

Boston, MA

Uwe E. Reinhardt

Department of Economics

Princeton University

Princeton, NJ

C. Burns Roehrig

American Society for Internal Medicine

Boston, MA

Jerald R. Schenken

Council on Legislation

American Medical Association

Omaha, NE

Steven A. Schroeder

Department of Medicine

University of California

San Francisco, CA

Jack K. Shelton

Employees’ Insurance Department

Ford Motor Co.

Dearborne, MI

Robert H. Taylor

American Academy of Family Physicians

Spartanburg, SC

B. Elizabeth Tunney

Retail, Wholesale, and Department

Store Union, International

New York, NY

Sankey V. Williams

Section of General Medicine

Hospital of the University of Pennsylvania

Philadelphia, PA

NOTE:

vi

OTA appreciates and is grateful for the valuable assistance and thoughtful critiques provided by the advisory panel

members. The panel does not, however, necessarily approve, disapprove, or endorse this report. OTA assumes full

responsibility for the report and the accuracy of its contents.
Contents

Page

CHAPTER 1: SUMMARY AND POLICY IMPLICATIONS. . . . . . . . . . . . . . . . . . . . . . . 3

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Urinary Stones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Alternative Treatments for Urinary Stones. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

ESWL: Efficacy, Safety, and Regulation by the Food and Drug Administration . . . 5

The Costs and Economics of ESWL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

ESWL and Federal Payment Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Effects of Federal Policies on Planning for ESWL.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Conclusions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

CHAPTER 2: URINARY STONES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Structure and Function of the Urinary Tract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Epidemiology of Upper Urinary Stones. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Incidence of Urinary Stones. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Distribution of Stones. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Stone Recurrence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

Upper Urinary Stones and Treatment Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

CHAPTER 3: ALTERNATIVE TREATMENTS FOR URINARY STONES.. . . . . . . . 23

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Approaches to Stone Treatment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Dietary and Medical Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

Open Surgery. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Transurethral Manipulation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Percutaneous Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Instruments for Stone Destruction and Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Mechanical and Chemical Removal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27

Electrohydraulic Lithotripsy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Ultrasonic Lithotripsy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

Experimental Endoscopic Lithotripsy Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

CHAPTER 4: ESWL: EFFICACY, SAFETY, AND REGULATION BY THE

FOOD AND DRUG ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Description of the Dornier Lithotripter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Early Studies of ESWL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Regulation by FDA and Clinical Trials in the United States . . . . . . . . . . . . . . . . . . . . . . . 36

Safety and Efficacy of ESWL: Current Status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38

Other Extracorporeal Shock Wave Lithotripters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

CHAPTER 5:THE COSTS AND ECONOMICS OF ESWL . . . . . . . . . . . . . . . . . . . . . . . 4 5

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45

Costs to the Health Care Facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Capital Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Operating Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46

Effects of Patient Caseload . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

Ambulatory Centers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

Implications of High Fixed Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

Costs and Economics of Physician Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

vii
Contents—continued

Page

Comparing Costs of Alternative Technologies. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53

Disability Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56

CHAPTER 6: ESWL AND FEDERAL PAYMENT POLICIES. . . . . . . . . . . . . . . . . . . . . . 61

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61

Medicare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Coverage Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Hospital Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63

Payment to Ambulatory Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

Payment for Physician Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70

Other Public Payers for Health Care Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Veterans Administration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 74

Department of Defense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75

Indian Health Service . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76

CHAPTER 7: EFFECTS OF FEDERAL POLICIES ON PLANNING

FOR ESWL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

Federal Planning Policy and the CON Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79

The State CON Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80

The Effects of CON and State Health Planning Systems . . . . . . . . . . . . . . . . . . . . . . . . 82

Planning and the Dynamic Market . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 84

APPENDIX A.–ACKNOWLEDGMENTS AND THE HEALTH PROGRAM

ADVISORY COMMITTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

APPENDIX B.–ESWL: TECHNICAL BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . 92

APPENDIX C.–CODING SYSTEMS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 94

APPENDIX D.–GLOSSARY OF TERMS AND ACRONYMS . . . . . . . . . . . . . . . . . . . . 96

REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ......................101

Tables

Table No, Page

1. Relative Frequencies and Radiodensities of Major Types of Urinary Stones. . . . . 17

2. Summary of Estimates of the Incidence of Urinary Stones in the United States . 17

3. Foods Containing High Levels of Calcium or Oxalate . . . . . . . . . . . . . . . . . . . . . . . 24

4. Extracorporeal Shock Wave Lithotripters Under Development in the

United States, December 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

5. Two Estimates of Hypothetical Annual Facility Costs of the

Dornier Lithotripter, 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47

6. Average Per-Case ESWL Operating Costs of Hospitals As Reported

in Two Surveys, 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 48

7. Approximate Average Technical Charges and Caseloads at the Six

Longest-Operating Extracorporeal Shock Wave Lithotripsy Sites

in the United States, May 1985 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49

8. Estimates of Number of Extracorporeal Shock Wave Lithotripters Required

in the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50

9. Domier Lithotripters Installed in the United States as of December 1985 . . . . . . . 51

10. Examples of Average Hospital Charges for Alternative Methods of Removing

Upper Urinary Stones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
Contents—continued

Table No. Page

11. Diagnosis-Related Groups Used as Basis for Medicare Payment for

Urinary Stone Treatment, 1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64

12. Medicare Admissions in DRGs Relating to Stone Disease as Represented in the

Medpar Database, 1981 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67

13. Sample Urologists’ Fees for Selected Stone Removal Procedures, 1985 . . . . . . . . . 70

14. Certificate-of-Need Thresholds in Each State and the

District of Columbia, 1986 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 81

C-1. ICD-9-CM Codes Relating to Urinary Stones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 95

Figures

Figure No, Page

1. Diagram of the Urinary Tract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

2. Alternative Methods for Medicare Payment for Services Provided to a

Hypothetical Patient Presenting the Symptom of Extreme Flank Pain . . . . . . . . . . . . 73
Chapter 1

Summary and Policy Implications
Chapter 1

Summary and Policy Implications

INTRODUCTION

Extracorporeal shock wave lithotripsy (ESWL)

is revolutionizing the treatment of kidney stones.

This technology, which disintegrates stones in the

kidney and other upper urinary areas through the

use of shock waves, does not require an incision

and is immensely attractive to patients who suffer from such stones. Although great uncertainty

still remains as to the long-term effects of ESWL

treatment, at present it appears to be both effective and highly desirable for many of these patients. Many hospitals and physicians are eager

to provide this treatment, and third-party payers

of health care are eager to reimburse for it. Yet

the arrival of ESWL on the American market has

presented a challenge to U.S. health policies and

the health care system.

The Federal Government actively influences the

development of ESWL technology and its diffusion into the health care system in many ways.

Trade policies and monetary policies affect the

availability of the Dornier lithotripter, and other

ESWL devices manufactured outside the United

States, to U.S. hospitals. Science, patent, tax, and

other domestic policies affect the willingness and

ability of U.S. companies to develop competitive

devices. Federal health policies, the focus of this

study, govern to a greater or lesser extent the marketing, purchase, payment, and planning for medical technologies, These health policies include the

requirements of the Food and Drug Administration (FDA), which affect the manufacture and

marketing of ESWL devices. Other Federal health

policies relate to the payment and planning for

medical services, which affect the acquisition and

distribution of the devices.

The lithotripsy device is large and very expensive, It is most comparable in price to major diagnostic imaging equipment. A complete lithotripsy

facility, with adjunct cystoscopy rooms, recovery room, and anesthesia capabilities, is compara1The diffusion of a health care technology refers to the extent and

manner of its adoption and use by health care providers and patients.

ble to a surgical suite. And a single ESWL unit

can serve a large population, analogous to the specialized services of a heart surgery center or a burn

unit.

Despite the fact that it is not a “typical” medical technology, ESWL deserves close attention for

two reasons. First, it has illustrated a number of

ambiguities and problems in the Medicare payment system, and many of the dilemmas it has

posed—and still poses—to Medicare also face

other third-party payers. These dilemmas may

well occur a second time if the technology is successfully extended to treatment of gallstones. Lessons from Medicare’s experience with ESWL may

also benefit a variety of other medical technologies that, like ESWL, are not easily categorized

for the purposes of Medicare payment.

Second, and more importantly, ESWL has great

cost-saving potential that may never be realized

under current health payment and planning policies. If ESWL is provided in regional centers that

are used to capacity, it will cost less per patient

to the centers and perhaps to payers than most

alternatives. But because ESWL, if available at

only a small number of centers, is potentially very

profitable to those centers, many hospitals, physician groups, and other organizations wish to be

among those who own a lithotripter. ESWL is a

very attractive technology to patients, and hospitals and physicians expect to benefit from providing it. Conversely, hospitals without an ESWL

unit, and physicians without access to one, expect to lose patients. These circumstances create

strong incentives to install and use an ESWL unit,

even if competition from nearby ESWL centers

means the unit itself will generate little, if any,

revenue greater than cost.

This case study analyzes the effects of Federal

health policies on ESWL and its integration into

the American health care system. As background

for this analysis, the study first describes the incidence of urinary stones and the need for stone

treatment (ch. 2) and presents a brief overview

3
4

of the literature on the safety and efficacy of alter- that affect the adoption and use of this technolnative treatments for urinary stones (ch. 3). Chap- ogy. Finally, chapter 7 examines the effects of

ter 4 reviews the evidence on the safety and effi- health planning policies on ESWL and discusses its

cacy of ESWL itself and discusses the effects of future direction and use.

the requirements of FDA on its development.

Chapters 5 and 6 describe the costs and economics The remainder of this chapter summarizes each

of providing ESWL and the payment policies of of these topics and their implications for Federal

the Federal Government, particularly Medicare, policies.

SUMMARY

Urinary Stones

Urinary stones, or calculi, are a familiar phenomenon with known characteristics but with

often puzzling origins. Stones of the urinary bladder are common in less developed countries, while

stones in the kidney and upper ureter predominate in developed nations, Differences in diet and

fluid intake may be partially responsible for this

phenomenon. Predisposing factors for developing urinary stones include a past history of stone

formation, certain hereditary conditions, and disabilities due to spinal cord injuries (which reduce

the body’s control over the urinary system). Males

and persons of Caucasian ancestry seem to develop stones more readily than others in the population, though this result may obtain partially

from sampling error and the fact that men seem

to form stones at an earlier age than women.

Although the exact factors that cause the body

to alter its metabolic environment are unknown

in many cases, several metabolic conditions are

correlated with stones. Persons with calcium-containing stones, the most common type, usually

have abnormally high concentrations of calcium

or uric acid in the urine. Persistent urinary tract

infections and the presence of certain conditions

and diseases, such as renal tubular acidosis, are

also consistent predictors of stones. Medical treatment of metabolic disorders can often reduce the

incidence of stone recurrence, and advances in

such treatments may affect the number of patients

with stones requiring more aggressive treatment.

Urinary stones are quite common. Data on

stone incidence in the United States indicate that

approximately 3 out of every 2,000 persons annually require hospitalization for urinary stones

(196). The rate for men is higher than average,

about 2 hospitalizations per year for every 1,000

men in the population; approximately 10 percent

of men will form urinary stones at some time in

their lives (83). Incidence of stones varies considerably by region, with persons living in the Southeastern United States more likely and those in the

West less likely to form stones. There is strong

evidence that stone incidence in the United States

has increased over time, but whether this trend

will continue is still a matter of debate (14).

Estimates of the exact incidence of upper urinary stones in the United States are fundamental

to analyses of the impact of stone treatment technologies. Most estimates are from hospital discharge data; these probably underestimate the total number of symptomatic stones, but they may

be a reasonable estimate of the number of stones

requiring aggressive treatment. The extent of the

market for each treatment alternative depends on

the extent to which stones that could be treated

less aggressively are considered eligible for that

treatment. It also depends on the extent to which

the alternative is applicable to stones other than

upper urinary stones, particularly stones in the

lower urinary tract and the gall bladder.

Alternative Treatments for

Urinary Stones

ESWL aside, physicians’ options for treating

and preventing urinary stones have greatly expanded in recent years. Patients with very small

stones, which may pass out of the body without

assistance, are commonly treated with pain medi-
5

cation and high fluid intake. Prevention of stones

can also be accomplished in many instances with

careful diet and a small but growing number of

drugs that can help reduce stone recurrence. The

willingness of a patient to comply with a longterm strict dietary regimen, however, may be a

limiting factor in prevention.

Surgical procedures have been standard treatment for problematic urinary stones for some

time. Although traditional open kidney surgery

is usually successful, it is associated with a significant risk of complications, and successive surgeries can eventually damage or destroy a kidney. Due to the great expansion in alternative

techniques, open surgery is now on the decline,

though it will continue to be the treatment of

choice in a small proportion of cases not suited

to other approaches.

Transurethra1 2 manipulation of stones can often

be used to extract lower urinary stones without

an incision, as instruments are passed up the urethra to the bladder and lower ureter. Simple

catheterization (insertion of a tube up into the urinary tract) may also induce a stone to pass. Transurethral manipulation, and particularly catheterization, is frequently used in conjunction with

ESWL.

Percutaneous procedures, which require only

a small incision and an established passageway

to the stone through the intervening flank tissue,

are a recent addition to the urologists’ armamentarium. They carry about a 4-percent risk of significant complications (166). Their benefits over

traditional open surgery include reduced hospitalization and convalescence and, in most cases,

less expense. Percutaneous fragmentation and extraction of stones is sometimes performed either

before or after ESWL for very large renal stones.

Its use, either alone or in combination with ESWL,

has increased dramatically in recent years and is

still expanding rapidly.

A variety of tools are available to fragment

and/or extract stones in either transurethral or

percutaneous procedures. Mechanical crushers

‘This study includes as transurethral procedures those procedures

that are transureteral as well, i.e., require that instruments be passed

through the urethra and bladder and up into the ureter.

have been used but are rare; special forceps and

baskets to extract stones are much more common.

Dissolution of stones through prolonged direct application of drugs has also been used but is not

widely accepted. Combination therapy of dissolution treatment and ESWL has been tried (149).

Two methods of fragmenting and removing

stones with power tools are electrohydraulic and

ultrasonic lithotripsy. Both tools are incorporated

into probes that are inserted to the point of the

stone. Electrohydraulic lithotripsy, which relies

on shock waves produced by a spark to fragment

stones, has been most successful in transurethral

removal of bladder stones (108). Ultrasonic lithotripsy, in which the fragmenting energy is produced by an ultrasound device, has been more

commonly used in percutaneous treatment of renal stones. Other power lithotripters, utilizing laser energy or microexplosion techniques, are currently under investigation but are not approved

for marketing in the United States.

ESWL: Efficacy, Safety, and

Regulation by the Food and Drug

Administration

ESWL is a very new technology with characteristics unlike any other treatment for stones. Approved by FDA only since December 1984, for

treatment of upper urinary stones, the Dornier

lithotripter uses shock waves produced outside of

the body to fragment stones without an incision.

Stones are pinpointed during the procedure by an

X-ray system that is part of the device. Only one

manufacturer, Dornier Medical Systems of West

Germany, presently has FDA approval to market

the device, but several other companies around

the world are developing their own models.

Despite concern in animal trials about damage

to lung and other tissue, experience with ESWL

thus far demonstrates a very low rate of complications with the procedure.3 The most common

3Tw0 patients have died under circumstances associated with

ESWL. One patient died of a heart attack during the procedure during clinical trials of an early ESWL device model in West Germany.

However, the cause of the heart attack was determined not to be

related to the application of shock waves. The second patient, a

U.S. patient about to undergo ESWL, died of anesthesia complications in 1985 (203).
6

I

Photo credit: Dornier Medical Systems, Inc., Marietta, GA

As of April 1986, Dornier Systems of West Germany

was the only manufacturer of ESWL equipment with

approval to market the technology.

side effects of ESWL are pain and bloody urine;

the former is treated with medication in about

two-thirds of patients in the United States undergoing ESWL, and the latter usually resolves without treatment. Radiation from ESWL is higher

than that from X-rays associated with standard

open surgery but lower than that from percutaneous procedures.

Since the Dornier lithotripter was a new device,

substantially different from any technology marketed before 1976 (when the Medical Device

Amendments were enacted), the lithotripter had

to obtain FDA approval before it could be marketed in the United States. While awaiting approval, the device underwent clinical trials at 6

U.S. hospitals to support data from over 2 years

of clinical trials in West Germany. Approval was

granted in December 1984, 10 months after the

first ESWL device was installed in the United

States.

ESWL has already emerged as the preferred

treatment among many urologists for most upper urinary stones. It is estimated to be effective,

alone or in combination with other therapies, in

treating up to 95 percent of the patients for whom

it is used, and the majority of patients treated with

ESWL show no signs of stones 3 months later. As

many as one-quarter of ESWL patients may require repeat or adjunct procedures; these patients

often have stones that are large, located in the ureter, or accompanied by a urinary tract infection.

Over 50,000 people worldwide had been treated

with ESWL as of October 1985 (81), and the number has increased substantially since.

ESWL technology has continued to advance at

a rapid pace. At least three American manufacturers are developing their own ESWL devices,

although as of December 1985 only one had received permission from FDA to begin clinical

trials. At least one French device is also in clinical trials in France. It is unlikely that any devices

competing with the Dornier lithotripter will be

available on the U.S. market before the end of

1986. Dornier itself is developing an ESWL device that will fragment gallstones; the device has

begun clinical trials in West Germany.

The impact of Federal premarket approval policies may be felt by manufacturers developing

ESWL devices to compete with the Dornier device. Some of the alternative devices being developed are significantly different from the Dornier

device in the source of the shock wave, the path

through which it travels, and the imaging system.

Although manufacturers would probably undertake substantial clinical testing of new ESWL devices in any case, for marketing purposes, FDA

requirements for testing and data collection will

probably encourage more rigorous and extensive

testing than would otherwise have been done.

These requirements will help ensure the safety of

new ESWL devices, but an unintended effect of

premarket approval policies maybe to retard the

speed with which competitors can get their devices to market to compete with the Dornier

device.

The Costs and Economics of ESWL

An important characteristic of ESWL is that it

is very costly to purchase but can save overall

medical expenditures if used efficiently. In 1985,

the cost of purchasing and installing a Dornier
7

lithotripter was approximately $2 million, depending on the exchange rate and on extent of renovation and building needed for the facility. Manufacturers of alternative extracorporeal lithotripters

under development report anticipated purchase

prices of $400,000 to $850,000 for their devices;

how these devices will compare in quality to the

Dornier device is still unknown. The costs of operating a lithotripter will probably vary less among

upcoming and established models. The most likely

source of future variations in operating cost would

be the development of a longer lasting and less

expensive power source for the shock wave. Because of the high fixed costs of performing ESWL,

per-patient costs decline dramatically as the number of patients treated increases.

The high fixed costs of ESWL, combined with

its use for a single, definable population (those

with urinary stones), make this technology one

that may be most appropriately and efficiently

provided in a few regional centers. Observers

have predicted a “need” for ESWL of as few as

17 units (155) and as many as 175 units (11), depending on how many urinary stone patients are

assumed eligible for the treatment and how many

patients per year each unit treats. Dornier had already installed 50 ESWL units by the end of 1985

(125), equal to the median estimate of units

“needed” as calculated by the Blue Cross and Blue

Shield Association (14), The attraction of this

technology to patients, and thus to providers, has

generated concern that hospitals and other purchasers may overpurchase ESWL units, leading

to higher costs to payers and to the ESWL centers

themselves.

The cost to physicians of performing ESWL is

difficult to define, because of the problem in valuing time and experience. q Physician charges for

ESWL, approximately $1,800 to $2,000 for single treatments, have been based on their charges

for open surgery. However, ESWL will probably

be less expensive for physicians to perform than

open surgery or percutaneous lithotripsy in the

long run, because it appears to require less phy

-

sician time. If payments to physicians for ESWL

are equivalent to those for invasive procedures,

physicians are likely to have strong financial incentives to gain access to, and perform, ESWL.

These incentives are strengthened by the attractiveness of ESWL to patients, who may seek out

physicians performing the procedure.

An attractive feature of ESWL is the potential

for minimizing or eliminating hospitalization.

ESWL is being performed on ambulatory patients

at some centers where patients have adequate

medical and social support, such as easy and rapid

access to urgent care services for pain medication.

Another important consideration for patients is

the short recuperation time from ESWL. Most patients can return to normal activity in less than

a week of the procedure, minimizing work time

lost. Alternative surgical technologies for removing stones can involve back-to-work delays as

short as 1 week (for percutaneous lithotripsy) and

as long as 6 weeks (for open surgery) (129,170).

Comparing total institutional and professional

costs of alternative treatments for upper urinary

stones is difficult because no studies of the range

of alternatives available have been performed on

randomly chosen or well-matched patients. Independent studies of total historic charges in two

hospitals, however, combine to suggest that ESWL

is usually less expensive than alternatives when

performed alone. Reported charges indicate that

one-stage percutaneous procedures may sometimes be less expensive than ESWL, but since neither institution performed both procedures, this

conclusion is a tenuous one. Total charges for

stone removal and associated hospital services in

these studies were higher for open surgery than

for either ESWL or most percutaneous methods.

ESWL and Federal Payment Policies

4

‘The distinct ion between costs and charges is often unclear i n the Federal payment policy exerts its greatest inmedical literature. “Costs,” as used here, refers to resource costs fluence through the Medicare program, both be- ef the provider of services. These are inputs such as physic]an time,

labor and administration costs, construction and depreciation, and cause of Medicare’s actual payment methods and

the costs of medical devices and drugs, “charges,” on the other hand, levels and because it is often a model for State

are essentially “1ist prices” assigned by the provider (53). Because and private payment for health care services. a provider may charge more than its costs for one service to make

up for losses i n another service, charges are not necessarily direct 1 v Medicare has covered ESWL provided in hospi-

,

related to costs. tals since March 15, 1985.
8

Medicare payment for the operating costs incurred by hospitals for inpatients is made under

the Prospective Payment System (PPS), which

pays a set rate for each of 469 diagnosis-related

groups (DRGs). Because ESWL is unlike any current invasive procedure, its use as the sole procedure places a patient in one of two DRGs that include most medical treatment for upper urinary

stones. These DRGs pay considerably less than

do the DRGs for surgical treatment for urinary

stones, and thus the payment a hospital receives

for providing ESWL is considerably less than the

payment it would receive for providing surgery.

Payment for these medical DRGs is likely to cover

actual operating costs for a patient only if that

patient has a short hospital stay and if the hospital is very efficient, treating a large number of

ESWL patients.

Capital costs are not incorporated into PPS, but

are paid by Medicare according to its share of

those costs. At present the capital costs of purchasing an ESWL device are quite large, and if

capital costs become reimbursed as some percentage increase in current DRG payments (as has

been proposed), the DRG payment might not

cover ESWL costs even for hospitals providing

ESWL efficiently. The extent to which this payment system would discourage purchase of ESWL

devices depends on the mechanisms used by hospitals to evaluate capital investments and the development of less expensive ESWL devices.

Medicare will pay for ESWL provided to hospital outpatients but not for the facility costs of

ESWL provided in other ambulatory centers. Experience with ESWL provided to ambulatory patients is small but growing. If ambulatory ESWL

becomes widely accepted, there are likely to be

incentives for hospitals to encourage physicians

to treat patients as hospital outpatients, since payment for these services is currently based on the

costs of providing the services rather than on a

DRG rate. Coverage of ESWL provided in ambulatory surgical centers (ASCs) requires a separate

decision by the Health Care Financing Administration (HCFA) to include ESWL on the list of procedures payable by Medicare in this setting. Even

if ESWL were covered in ASCs, however, these

facilities would have little financial incentive to

perform ESWL on Medicare patients at current

Medicare payment rates for procedures in this setting; the highest ASC payment rate for a single

procedure is $336.

The issues ESWL raises regarding Medicare

physician payment are somewhat different from

those regarding hospital and ASC payment. Medicare pays physicians the “approved charge” for

covered services, an amount calculated from the

actual and historical charges for each service. Because ESWL is a new technology, there is no

charge history for it. Some urologists have argued

that performing ESWL should be reimbursed at

the same rate as performing surgery for upper urinary stones. Medicare carriers in the first States

with ESWL have generally chosen to reimburse

at a level slightly below this rate; HCFA is suggesting that a reasonable rate for the procedure

may be quite a bit lower than charges for surgery.

A problem with the current Medicare payment

method is that, although the costs of performing

a new procedure often decline over time, charges

tend to remain at initial high levels or rise. Alternative payment methods currently under discussion, such as fee schedules, payment for packages

of services, and cavitation payment, might provide a context for more systematic reevaluation

of payment rates. Alternatives in which physician

payment rates are unchanged by the treatment

chosen, such as cavitation payment, might also

promote the least costly of the range of appropriate treatments for any given patient.

Federal payment policies can have a substantial effect on ESWL. Although Medicare patients

are a minority of those persons who have stones,

these patients may be more likely than younger

or more able-bodied persons to be recommended

for ESWL treatment because Medicare patients are

at a higher risk of complications from surgery.

Medicare policies, through the level of payment

for ESWL treatment, can have a significant impact on patient access; high payment levels might

encourage hospitals to provide the technology,

while low levels might discourage purchase of

ESWL units and the provision of ESWL services

to Medicare patients. However, high hospital payment levels could also encourage the overpurchase

of ESWL units, driving the costs of treating each

patient upward because the purchase cost of each

unit would be distributed across only a few pa-
tients. Furthermore, under Medicare’s current

physician payment method, initial payments to

physicians that are comparable to rates for surgery may encourage provision of ESWL to Medicare patients, but such payments have tended to

remain high even after costs declined and a technology was widely provided. A payment method

that incorporated subsequent review or occasional

renegotiation of prices, such as through contracting with individual ESWL centers for the care of

Medicare patients, would be more successful at

reducing payments as costs declined.

The Veterans Administration, the Department

of Defense, and the Indian Health Service (IHS)

are also significant Federal purchasers of health

care. The Veterans Administration is installing

one donated Dornier lithotripter and plans to purchase two or three more in the near future, to be

situated at centers serving a high number of spinal cord injury patients (102). The Department

of Defense operates military hospitals through its

Armed Services branches. It has not yet purchased

a lithotripter. IHS similarly operates a number of

hospitals for its own client population. Its hospitals, however, are primarily small rural ones; none

now owns a lithotripter and none is likely to acquire one in the near future. In some areas, IHS

also contracts for certain services that are available in community hospitals but not in IHS hospitals. Where urgent stone treatment is such a

service, an IHS beneficiary might have access to

ESWL if the contracting community hospital provides this service.

The Civilian Health and Medical Program of

the Uniformed Services (CHAMPUS), operated

by the Department of Defense, provides health

insurance for dependents of active members of the

Armed Services, for retirees, and for the dependents of retirees. Although CHAMPUS provides

strong incentives for its beneficiaries to receive

care at military hospitals, beneficiaries may in

some cases also be reimbursed for care in the community. CHAMPUS pays for physician services

on the basis of “reasonable” charges and is currently paying the charges submitted by physicians

for ESWL until it has a sufficient experience with

these charges to do otherwise (69).

Effects of Federal Policies on

Planning for ESWL

The Federal Government affects health care

planning both indirectly, through payment policies, and directly, through planning regulation

and funding. It regulates the acquisition of major medical equipment in two ways: through the

section 1122 provision of the Social Security Act

(Public Law 92-603) and through the National

Health Planning and Resources Development Act

of 1974 (Public Law 93-641). Section 1122 permits the Department of Health and Human Services to enter into voluntary agreements with

States. These agreements allow Medicare and

Medicaid to withhold certain capital-related payments for patient care in which major medical

equipment was used if the acquisition of that

equipment was not approved by a State planning

agency. If a State certificate-of-need (CON) law

is in effect, section 1122 is largely redundant.

Howeverf unless capital costs are incorporated

into PPS by October 1986, or Congress passes

some alternative legislation, section 1122 review

will become mandatory in every State, providing Medicare with potential grounds for denying

capital payments for ESWL in some cases.

The Health Planning Act required States to pass

regulatory planning laws in order to receive certain Federal health-related funds. These State

CON laws were to require all hospitals and other

specified institutions wishing to add facilities or

acquire major equipment to receive prior approval

from a State planning agency. Some States regulate the acquisition of certain medical equipment

by physicians’ offices as well. In recent years Federal enthusiasm for the State CON programs has

waned, and the penalizing provisions of the

Health Planning Act have not been enforced.5 As

of December 1985, eight States had no CON program at all.

CON laws in the past have not been found to

be particularly successful at restricting acquisition

of expensive equipment. They are unlikely to be

sucessful overall in preventing overpurchase of

ESWL, but in a few cases the State planning proc5

0n Feb. 4, 1986, the House of Representatives passed a bill (HR

3010) reauthorizing financing for health planning but terminating

such funding after the current fiscal year, which expires Sept. 30, IQ86.
10

ess seems to be facilitating some innovative arrangements to share the technology. The local

planning and purchasing arrangements for ESWL

are enormously varied. In some areas, such as

Ohio, the existence of CON laws seems to encourage hospitals and physicians to share the purchase and provision of a single ESWL unit (113).

In other areas, such as southwestern Pennsylvania, health planning agencies have been unsuccessful at encouraging sharing (36). Instead, agencies are rationing permission to acquire ESWL by

approving only one or two applications in order

to discourage overpurchase, awarding lucrative

near-monopoly rights to those centers. Still other

areas, such as Chicago, are apparently unable to

limit the number of ESWL units even in this way.

Planning for ESWL and anticipating its future

are complicated by the existence of a market that

is changing on five fronts:

CONCLUSIONS

The available evidence to date

relative to alternative invasive

suggests that,

technologies,

ESWL for upper urinary stones is equal or better

on safety and efficacy grounds, when performed

by an experienced physician in a hospital setting.

The rapid expansion of the technology into ambulatory settings offers opportunities to provide

ESWL at lower cost than at present. However,

safe ambulatory ESWL requires the availability

of transportation to appropriate emergency care

after the patient leaves the ESWL center, as well

as appropriately coordinated followup care by the

patient’s own urologist. Ambulatory treatment

will not be appropriate for many patients who

lack access to these services, and its quality compared to the quality of ESWL in inpatient settings

has not yet been thoroughly evaluated.

Considerable research remains to be done regarding the appropriate use of ESWL instead of,

or in conjunction with, endoscopic procedures for

upper urinary stones. Percutaneous lithotripsy has

evolved very rapidly, side by side with ESWL,

and is being performed in some centers with results comparable to those obtained with ESWL,

at comparable cost. As ESWL is applied to lower

1. advances in preventive technologies for urinary stones,

2. improvements in invasive treatments,

3. emergence of devices competitive with the

Dornier lithotripter,

4. greater experience in using ESWL, and

5. modifications in the Dornier lithotripter itself.

Of these, improvements in invasive treatments

and increased experience in the use of the Dornier lithotripter will have the most immediate effects. Competitive devices and extended applications of the Dornier lithotripter may exert some

effect on the market in a year or two. Preventive

technologies could have major effects, but their

impact is neither certain nor imminent.

urinary stones, the appropriate use of ESWL vs.

transurethral procedures will also become an area

requiring clinical scrutiny. In any case, evidence

suggests that open surgery is no longer the most

appropriate treatment for most urinary stone patients.

Substantial uncertainty regarding the long-term

use of ESWL remains. ESWL as currently performed includes significant ionizing radiation; the

development of high-resolution ultrasound imaging equipment may reduce this potential long-term

danger. More difficult to assess are the implications of any renal damage that might develop in

the long run for patients who undergo repeated

ESWL for stones, or a single procedure with a high

number of shock waves. No evidence regarding

this potential danger exists.

The United States may house enough Dornier

lithotripters to serve the domestic population by

the time other manufacturers can bring their devices to market; indeed, by some calculations, the

necessary number has already been reached. More

devices will improve patient access, but they will

also raise both the costs to hospitals (and other
centers) of treating each patient and, under current payment arrangements, most likely the expenditures of payers. Conversely, localization of

ESWL to a few regional centers may lower perpatient cost but implies more difficult access to

those patients living at great distance from these

centers. As with any expensive and sophisticated

technology, this problem will be especially acute

for rural inhabitants, such as many American Indians, since small rural hospitals (including IHS

hospitals) will not be able to afford or justify acquiring ESWL capabilities,

Hospital managers and physician groups may

urge the purchase of ESWL units despite the problems that may be encountered with oversupply

of the service, particularly if the payment rates

of Medicare and other payers are generous, On

the one hand, if a facility acquires an ESWL unit

in an area that produces a sufficient stone population to support the unit, that facility will reap

both prestige and profits. Furthermore, by not acquiring the device, a facility may lose a significant proportion of its patients to other facilities

in the area that do provide ESWL. Hospitals may

wish to acquire ESWL because they compete for

patients directly, and because they compete for

physicians as a way of drawing the patients referred by those physicians. These considerations

are strong incentives to purchase the machine, despite the fact that if many facilities in one area

provide ESWL, they will all have small caseloads

and consequently high costs and low profits or

losses, Furthermore, these incentives operate to

some extent even if payment rates are low, exacerbating the low or absent actual financial gains.

In theory, either payment or planning policies

could prevent overpurchase of ESWL and assure

a distribution of units consistent with population

size and stone incidence. In practice, neither will

probably fully achieve these goals.

Finally, the combination of payment and planning effects may have a significant effect on the

urology specialty. In any community in which not

all urologists have access to, or are trained to use,

ESWL, the urologist to which a patient is referred

may have a strong influence on the treatment received, Urology may develop a “subspecialty” of

those physicians who can perform ESWL and

have access to ESWL units. Such a development

could have positive implications for the quality

of care afforded those patients receiving ESWL,

since their ESWL physicians would be highly experienced. However, it might result in great variations in treatment for the same indications, if

urologists who do not have access to ESWL units

are reluctant to refer their patients to urologists

who do. The incentives would be for urologists

without access to ESWL to underprescribe this

treatment for their patients, perhaps by routinely

performing surgery on younger patients with first

stones. Conversely, urologists with access to

ESWL would have an incentive to overuse it, perhaps by recommending the procedure when medical treatment might be sufficient.

Universal access of urologists to ESWL is no

panacea, however. In areas where a large number of urologists have access to an ESWL center,

patients have the greatest potential access to

ESWL through their urologists but could receive

lower quality treatment if each urologist does

ESWL only a few times a year and is consequently

less proficient at the procedure.

ESWL exemplifies the service specialization and

regionalization of tertiary care, as “stone treatment centers” specializing in urinary stone care

proliferate. The lessons learned from current payment and planning experiences may well be applicable again as ESWL technology is turned toward

treatment of gallstones, involving an entirely new

set of physicians and other providers and requiring new payment levels and a new assessment of

the appropriate role for ESWL, The fact that

ESWL for gallstones is likely to require a dedicated device, at least in the short term, suggests

that its diffusion may parallel that of ESWL for

urinary stones.
Chapter 2

Urinary Stones
Chapter 2

Urinary Stones

INTRODUCTION

Urinary stones are by no means a modern affliction. One stone was detected in a 7,000-yearold Egyptian skeleton (136), and infection-induced

stones were familiar to Hippocrates (67). The long

history of urinary stones, however, has not been

accompanied by a thorough understanding of

their underlying causes. Today, technologies to

treat the most common kinds of urinary stones

are far ahead of techniques to identify those individuals at risk and to prevent initial stone formation. One of the best predictors of urinary

stone formation is still a history of urinary stone

disease in the past.

The crystalline concretions known as stones (or

“calculi”) can occur in many parts of the body

besides the urinary tract. It has been estimated,

for instance, that 1.5 million Americans harbor

gallstones, although most of these stones are

asymptomatic (66). Calculi also appear in joints

and in such diverse organs as the prostate and

mammary glands. Urinary stones, however, are

the only ones widely amenable to extracorporeal

shock wave lithotripsy (ESWL) at present, and

they are thus the focus of this chapter.

Although urinary stones have been present for

thousands of years, industrialization seems to

have affected the locations in the body where

stones tend to form and the distribution of urinary stones in the population. Bladder stones are

common in developing countries and rare in industrialized nations; the converse is true for kidney and ureteral stones. Affluence and male sex

have been associated with an increased risk of

stone formation, but the reasons are not clear.

Dietary changes (increased protein) and decreased

fluid intake are attractive, but unproven, hypotheses that may partly explain the observed associations with stone disease (33). Hereditary factors may also be an important predictor of the

risk of developing urinary stones (44), but again

the precise mechanisms that lead to stone formation are, for the most part, poorly understood.

This chapter briefly reviews the structure and

function of the urinary tract and the types of

stones that occur. It then presents estimates of upper urinary stone incidence in the U.S. population and summarizes current thinking regarding

the distribution, causes, and predictors of upper

urinary stones, those most amenable to ESWL

treatment. It concludes with a brief discussion of

the applications and limitations of these estimates

of stones and stone recurrence as they apply to

discussions of ESWL.

STRUCTURE AND FUNCTION OF THE URINARY TRACT

The urinary system can be thought of as a series of connected structures that filter, collect,

channel, and store urine (155). In each of the

body’s two kidneys, blood is filtered through a

multitude of microscopic filtering units. The resulting urine, containing soluble body wastes and

electrolytes that must be discarded to keep the

body’s fluids in balance, drains into the hollow

core of each kidney by way of the renal calices.

These calices, finger-like protrusions that extend

up into the solid substance of the kidney, collect

the urine and channel it into the core, the renal

pelvis. From each renal pelvis, urine then passes

through one of the two respective tube-like ureters to the urinary bladder. There it is collected

and stored until urination occurs and the urine

passes through the urethra out of the body. Figure 1 diagrams the structure of the urinary tract.

Stones tend to be located at specific sites in the

urinary tract. A renal calix, where the urine first

filters into the kidney’s core, is a natural alcove

where stones may lodge and grow. Because there

are numerous calices, a single calix stone may not

15
16

.—Diagram of the Urinary Tract

Renal

Stone

Renal

Urethra

e

NOTE Figure IS not drawn to scale

Projections, ” Chicago, IL, May 1985

obstruct urine flow or lead to any other symptoms of stones. Larger stones may form in the renal pelvis itself. If these grow to mold themselves

to the inner contours of the pelvis and calices, they

are called “staghom” because of their obvious and

dramatic appearance on an X-ray. Large staghom

stones are potentially life threatening, and they

can also be quite difficult to remove.

Stones are frequently found at the junction of

the renal pelvis and the ureter or at a position approximately one-third down the ureter, where the

ureter’s diameter tapers slightly as it crosses blood

vessels. Migrating stones may lodge at these

points, blocking urine flow and necessitating

removal. Finally, stones can be found at the junction of the ureter and the bladder or in the bladder itself. Lower urinary stones—those occurring

in the urethra, bladder, or lower portions of the

ureters—are relatively uncommon in the United

States,

The causes of urinary stones have been vigorously discussed for some time and are still the subject of intensive research. Among the credible

theories are that stones are the result of supersaturation and crystallization of mineral substances

in the urine; that there exists a natural stone inhibitor in urine that is absent in some people;

and that abnormal macromolecules or crystalline

structures may induce stone formation. A combination of these theories probably is the best explanation for the cause of upper urinary tract

stones (20,33,44,138,198), And, although in some

cases urinary stones can be attributed to a specific disease or a metabolic abnormality,l in most

cases the factors leading to the onset of stone disease are obscure (198).

I Primary hyperparathyroidism, renal tubular acidosis, cystinuria,

primary hyperoxaluria, recurrent infections, and sarcoidosis all play

a role in stone formation (33).

EPIDEMIOLOGY OF UPPER URINARY STONES

There are four main types of upper urinary phosphate crystals, are also fairly common

stones, which are summarized in table 1 accord- are associated with urinary tract infections.

ing to their relative frequencies in the stone- least common stones are those composed of

forming population and their densities as they ap- tine (a sulphur-containing amino acid) or

and

The

cysuric

pear radiographically (on X-rays). Calcium-based acid. Cystine stones are associated with an instones are by far the most common in the United herited disease that results in elevated excretion

States and are generally subcategorized accord- of this and other amino acids. Uric acid stones

ing to their secondary components. They are also occur in persons with elevated levels of uric acid

the least well understood in their etiology. Stru- in the blood (such as persons with gout) or urine

vite stones, composed of magnesium ammonium and in persons with low urinary pH (52,198).
17 —

Table 1 .— Relative Frequencies and Radiodensities of

Major Types of Urinary Stones

Relative frequency

Stone type among stones Radiodensity a

— .—

Calcium stones 70-80% most dense

CalcIum phosphate 5-10

Calcium oxalate/phosphate 30-45

Calcium oxalate 20-30

Struvite 15-20

Cystine 3- 3 least dense

Uric acid 5-10 radiolucent

aThe radiodenslty of a stone indicates the ease with which It can be visualized

on X ray

SOURCE K N Van Arsdalen, “Pathogenesls of Renal Calculi, ’ Urologic Radio/-

ogy 665-73 spring/fall 1984

Incidence of Urinary Stones

Data on the incidence of urinary tract stone

disease in the United States come from three

sources: targeted surveys of hospitals, hospital

discharge abstract data collected by the National

Center for Health Statistics (NCHS) and the Commission on Professional and Hospital Activities

(CPHA), and studies of urinary stones in specific

populations. The estimates of stone incidence discussed in this section are summarized in table 2.

2

’ Incidence” is defined as the number of newly diagnosed cases

in the general population over a specified time period. It is distinct

from ‘ prevalence” which refers to the total number of cases exist -

ing in the population during a specified time.

As this table shows, the estimates vary considerably and do not lend themselves to simple interpretations.

The first estimate of urinary tract stone incidence was obtained from a survey of U.S. hospitals in 1952 (16). A discharge diagnosis of urinary

tract stones was used to define a case, and incidence was estimated at 0.95 per 1,000 persons for

that year. Another questionnaire survey, conducted in 1975, yielded an estimated incidence of

1.64 per 1,000 persons for 1974 (157). Although

these figures suggest a 73-percent increase in perceived incidence over the 22-year period, they are

of questionable accuracy because the two studies

were greatly hampered by low response rates,

which may introduce biases. (The response rates

for the 1952 and 1975 surveys were 11 and 27.2

percent, respectively. ) More recent data from

NCHS, collected through the annual National

Hospital Discharge Survey, indicate that the incidence of a primary hospital discharge diagnosis of upper urinary tract stones in the United

States was 1.29 per 1,000 persons in 1982 and 1.42

per 1,000 persons for 1983 (195,196). Data from

CPHA have produced similar estimates of incidence with considerable geographic variation (37).

A limitation of all of these estimates of the incidence of urinary stone disease in the United

Table 2.—Summary of Estimates of the Incidence of Urinary Stones in the United States

———.

Urinary stones

Source Year per 1,000 population Population studied

Johnson, et aI., 1979 . . . . . . . . . . . . . . . . . .....1950

Boyce, et al., 1956 ... ... ... . . . . . . .1952

Hiatt, et al., 1982 . . . . . . . . . . . . . . . . . . . . ..1970-72

Sierakowski, et al., 1978 . . . . . . . . . . . . . .....1974

Johnson, et al., 1979 . . . . . . . . . . . . . . . . . .....1974

Hiatt, et al., 1982 . . . . . . . . . . . . . . . . . . . . . . ..1971 -75

National Center for Health Statistics . . .. ..1982

National Center for Health Statistics . .......1983

Commission on Professional and Hospital

Activities . . . . . . . . . . . . . . . . . . . . . .........1983

0.57a

0.95

1.22

1.64

0.80a

0.36

1.29

1.42

1.42

Rochester, MN, residents

U.S. inpatients

San Francisco area inpatients

U.S. inpatients

Rochester, MN, residents

Northern California ambulatory patients

U.S. inpatients

U.S. inpatients

U.S. inpatients

aF(gures ~,ven here are (~pl{ed Reported t!gures are O 79 (males) and O 36 (females) for 1950 and 124 (males) and O 36 (females) for 1974

SOURCES W H Boyce, F K Garvey, and H E Strawcutter, “lnctdence of Urinary Calcull Among Patients In General Hospitals, 1948 to 1952, ’ J. Am Med Assoc

161 1437.1442, 1956, R A Hiatt, L G Dales, G D Friedman, et al , “Frequency of Urolithtasls (n a Prepaid Medical Care Program, ” Arn ./ Epk7ern/o/ogy

115(2) 255-265, 1982, C M Johnson, D M Wilson, W M. O’Fallen, et al , “Renal Stone Epidern!ology A 25-Year Study In Rochester, Minnesota, ” K/drrey Inter.

nat/ona/ 16624-831, 1979, R Sierakowski, B Flnlayson, R R Landes, et al , “The Frequency of Uroltthtasls (n Hospttal Dtscharge Diagnoses In the United

States, ” Irrvestigattve Uro/ogy 15 438-44t, 1978, U S Department of Health and Human Serwces, Public Health Service, National Center for Health Statistics,

“Number of Inpatients Discharged from Short..Stay Hospitals, by Category of F!rst L!sted Diagnoses, United Slates, 1982 (table 4), In National Center for

Health Statistics—1982 Summary’ National Hospital Discharge Survey, No. 95, Dec 27, 1983, U S. Department cf Health and Human Services, Publlc Health

Service, National Center for Health Statlstlcs, “Detailed Diagnoses and Surgical Procedures for Patients Discharged from Shorf.Stay Hospitals, Untted States,

1983, ” Vifal and Health Statlsf!cs 13, No 82, DHHS Pub No (PHS)8$1 743, Hyattsville, MD, March 1985, Commission on Professional and Hospital Actlvlties

da!a as ctted In H Alder, L/fhofr/pfers Non(nvasive Devmes for the Treafrnent of Kmlney Sfones (Chicago, IL American Hospital Assoclatton, 1983)
18

States is their reliance on hospital discharge data.

Counting discharges overestimates the incidence

of “hospitalizable” stone disease because of possible multiple admissions for the same stone. Furthermore, in the case of the NCHS estimates, the

data include only discharges for which urinary

stones were the primary diagnosis. Including discharges with a secondary diagnosis of stones increases the estimates by about one-third (3). On

the other hand, as demonstrated by one of the

following studies, a large proportion of stones—

perhaps a majority—do not require hospitalization. Thus, on balance, these hospital studies

probably underestimate the true incidence of stone

disease. Still, they do indicate a trend towards an

increase in incidence of urinary stones in the

United States over time.

One of the best available estimates of the incidence of urinary tract stones comes from a 25-

year study of Rochester, Minnesota residents,

which showed an increase in the annual ageadjusted incidence of urinary tract stones from

0.79 per 1,000 men in 1950 to 1.24 per 1,000 men

in 1974 (83). The incidence in women remained

stable for this period at 0.36 per 1,000. These data

represent as close to a complete sample as feasible and include diagnoses made in ambulatory as

well as in hospitalized patients. The 57-percent

increase in incidence rates of urinary tract stones

in men supports the observed trend from the hospital surveys.

The most recent study on the epidemiology of

urinary tract stones was reported from the Kaiser Foundation Health Plan in northern California. First, ambulatory clinic diagnostic information from the San Francisco Medical Center was

examined for “new or recurrent” stones covering

the period 1970 to 1972. The results showed an

age-adjusted annual incidence rate of 1.22 per

1,000 members—l .81 per 1,000 men and 0.59 per

1,000 women (75), A second calculated incidence

rate was based on hospital discharge diagnoses

for the entire Northern California Kaiser Foundation Health Plan from 1971 to 1975. Based on

the hospital data, the age-adjusted annual rate for

urinary tract stones was calculated at 0.36 per

1,000 members—().52 per 1,000 men and 0.19 per

1,000 women (75). Although the geographic populations compared in this study are by no means

identical, the results suggest that estimates of incidence based solely on hospital discharge data

may underestimate the total incidence of diagnosed urinary stones by a considerable amount.

Distribution of Stones

It has long been noted that urinary stones are

more common in some populations than in others.

Some of the predisposing factors to stone formation, such as certain diseases that lead to metabolic disorders, clearly have genetic components

(33). Racial, ethnic, and familial tendencies

toward stone formation have also been postulated

more generally; for example, in the United States,

Caucasians have a higher recognized incidence of

urinary stones than Native Americans or persons

of African or Asian ancestry (44,75,165). However, it is often difficult to separate hereditary factors from dietary and other lifestyle differences.

Distribution of urinary stones in the population varies considerably according to age and sex.

The Rochester and Kaiser studies found consistently higher stone incidence in men than in women

(75,83). NCHS data confirm this tendency for the

United States as a whole (195), but as a generalization it requires two important qualifications.

First, it may not be true for some subpopulations;

black men and women appear to have approximately equal probabilities of developing stones

(165). Second, the incidence of stones at autopsy

is also approximately equal for men and women

in the United States. This fact implies that much

of the higher incidence in men is due to earlier

onset and recurrence of stones (44).

The lifetime incidence of urinary tract stone disease also varies by sex, ethnicity, and socioeconomic factors, but researchers have estimated it

at approximately 10 percent for American men

(16,83,157). Stones peak in incidence in men between 40 and 60 years of age, and a stable rate

persists through the seventh decade (83). A decline in incidence in men and women older than

70 years of age was observed in both the Rochester and Kaiser studies (75,83). The incidence of

urinary tract stones in persons older than 65 years

of age is therefore similar to the average incidence

in the general population.
19

--

The Southern United States is frequently referred to as the “stone belt, ” and with good cause.

The incidence of upper urinary stones there in

1983, as measured by hospital primary discharge

diagnosis, was 1.84 per 1,000 population, compared to 1.39 in the Midwest, 1.16 in the Northeast, and 1.00 in the Western United States (37).

Differences in diet and climate have been cited as

possible reasons for these disparities (44), but it

is possible that physician and hospital practice

patterns also play a role in the apparent regional

differences in stone incidence (3).

Because a high incidence of upper urinary

stones seems to be influenced by diet and by the

industrial development of an area, it has been

associated with affluence. However, the Kaiser

study found an inverse correlation between a history of urinary tract stones and the educational

background of the person (75).

Stone Recurrence

A majority of patients who have had one upper urinary stone develop another one (83). More

precise estimates of stone recurrence are available,

but they tend to be difficult to compare because

they use different followup periods and other

measurements. Comparability is also hampered

by possible confounding factors, such as distributional factors (e.g., geography) and diet and treatment regimens.

One retrospective evaluation of 538 patients

with upper urinary tract stone disease for a minimum of 10 years reported that 75 percent had

recurrences over a mean period of 18.5 years

(206), In another study, researchers followed 416

patients at a London stone clinic for a mean period

of 7.6 years and reported that 36.1 percent of the

sample developed a second stone (99). The Rochester study sample had a symptomatic recurrence

rate of 30 percent for women and 45 percent for

men over 14 years of followup, with the highest

recurrence in the first year (83). Other investigators have reported an overall average interval between first and second stones of 4.5 years, and

they believe that natural recurrences approach 100

percent if patients are followed for a long enough

time (33).

Second stones can often be prevented with medical treatment, even when the exact cause of the

metabolic disorder leading to the stone is obscure.

For example, the factors stimulating the body to

create an environment leading to calcium stones

are largely unknown. However, metabolic evaluations of people with calcium stones show that

up to 60 percent have high concentrations of calcium and/or uric acid in the urine (33). The presence of high uric acid concentrations alone appears to predict a more severe course of stone

formation, with comparatively shorter inter-event

intervals, than when high concentrations of both

are present (34). Medical treatment of the metabolic abnormalities in calcium stone formers decreases the recurrence rate in patients with frequent episodes (32,50,118,130).

UPPER URINARY STONES AND TREATMENT TECHNOLOGIES

The above discussion suggests that upper uri- Of all the factors discussed, one of the most imnary tract stones in the United States are com- portant considerations for treatment technologies

men, have increased in incidence over the past remains difficult to quantify: the precise number

30 years, vary in distribution across regions and of stones to be treated. Most current estimates of

populations, and primarily affect men during the the number of stones requiring treatment are

economically productive period of their lives. Al- based on 1983 hospital survey data from NCHS.

though persons at risk of stone formation can be Used alone, this incidence of 1.42 kidney and ureidentified in a few cases before they develop their teral stones per 1,000 population (196) implies the

first stone and stone recurrence can often be con- xistence of over 336,000 stones per year that lead

trolled or prevented, a large number of people de- to hospitalization .

3 This number includes readmisvelop upper urinary stones for reasons still unclear to modern medicine. ‘This figure assumes a U.S. population of 237 million (184).
20

sions for the same stone but does not include patients in Federal hospitals, such as Veterans

Administration and military hospitals, that are

not included in the NCHS survey. Increasing this

figure by 30 percent to include all patients with

a secondary hospital diagnosis of kidney or ureteral stones (3) yields an estimated 437,000 patients hospitalized with stones. If, furthermore,

50 percent of all patients with stones are treated

solely in ambulatory settings, as many as 874,000

persons each year may be diagnosed with stones.

Not all of the patients hospitalized with stones

undergo aggressive treatment; in 1983, approximately 65,000 patients in non-Federal hospitals

underwent surgery of the kidney or ureter (155)

and approximately 120,000 underwent either surgical or transurethral procedures on the urinary

tract (3), A substantial but unknown number of

these procedures were for stone removal. Thus,

the annual number of patients treated for newly

diagnosed kidney or ureteral stones may be as

high as 874,000; the annual number having open

surgery or its equivalent as treatment for stones

may be as low as some proportion of 65,000. The

number for whom ESWL is appropriate has been

independently estimated by at least four different groups (3,11,14,155) and lies somewhere in

this range. That unknown number affects both

the use and the costs of ESWL and is itself affected

by alternative technologies, patient preferences,

physician decisions, and the availability of the

technology. These subjects are the topics of the

subsequent chapters in this case study.
Chapter 3

Alternative Treatments

for Urinary Stones
Chapter 3

Alternative Treatments for Urinary Stones1

INTRODUCTION

The past decade has seen a great expansion in

the physician’s armamentarium of tools to treat

and prevent urinary stones. Medical management

of stone-forming patients has become more sophisticated and effective, and the diffusion of less

invasive surgical procedures and safe, effective

stone fragmentation tools has provided physicians

with a wide array of choices with which to treat

patients. Although the introduction of the Dornier lithotripter on the U.S. market in 1984 has

attracted the most attention, in fact there are a

number of alternative techniques, both complementary and substitutive, to treat patients with

urinary stones.

This first part of this chapter reviews the most

widely recognized approaches to treatment, other

than extracorporeal shock wave lithotripsy

(ESWL), currently available: medical management, including dietary regimens and drug treatment to prevent recurring stones; traditional open

surgery to remove stones; transurethral removal

of stones; and percutaneous stone removal, a less

traumatic surgical procedure to remove upper urinary stones that is gaining increasing acceptance.

Because ESWL is discussed in great detail in the

next chapter, it will not be included here. The second part of this chapter describes the tools that

are used in transurethral and percutaneous procedures to remove, fragment, and dissolve stones.

Both the treatment techniques and the instruments

employed in them are areas undergoing rapid

technological change,

APPROACHES TO STONE TREATMENT

Dietary and Medical Management

Most patients with symptomatic urinary stones

initially consult their physicians because of pain

(colic) or blood in the urine (hematuria). The

majority of these stones are sufficiently small to

pass spontaneously, although frequently painfully. Thus, analgesics to relieve pain are a fundamental tool in the management of urinary stone

disease (44). Although smooth muscle relaxants

have been used to relieve spasm and to promote

passage of the stone (121), they are of doubtful

value (112). In addition to treatment for pain,

acute medical management of stones usually includes a high fluid intake to increase urine flow

and encourage the stone to pass.

The size and location of a stone at the time of

clinical presentation help to predict its often er1This chapter draws extensively from J .A. Showstack, E.J. PerezStable, and E. Sawitz, “Extracorporeal Shock Wave Lithotripsy:

Clinical Application and Medicare Physician Payment, ” paper prepared for Office of Technology Assessment, Washington, DC, Aug.

1, 1985.

ratic behavior. Large stones found in the upper

urinary tract at the time of diagnosis are the least

likely to pass spontaneously and involve the greatest risk of serious complications. In one series of

292 cases, 91 percent of stones 5 mm or smaller

passed spontaneously or with the help of endoscopic procedures (described below), but 60

percent of larger stones required surgery (55). Results from other studies have indicated that stones

over 7 mm in size impacted in the upper ureter

rarely pass spontaneously (146). Stones that have

not passed and have remained symptomatic after 6 weeks of conservative therapy are generally

considered for removal, Evidence of infection

above the stone, refractory pain, ureteral obstruction, and anuria (lack of urine flow) are considered absolute indications for stone removal (112).

Effective long-term medical management is an

important preventive measure for any patient who

has had a urinary stone. The most basic preventive management includes a prescription to increase fluid intake; in many cases a dietary regi2 3
2 4

—

men and/or drug therapy are also prescribed. It

has been suggested that dietary management is

often overlooked or underappreciated (163), perhaps because patient compliance can be difficult.

Appropriate diet and medication therapy requires

that the patient be evaluated thoroughly to identify metabolic abnormalities, because preventive

treatment depends on the underlying metabolic

disorder.

For calcium stones, research suggests that a

fluid intake that guarantees a minimum urine output of 2 liters per day can decrease recurrence rates

in up to 60 percent of patients (77), A moderate

calcium restriction of 400 to 600 mg per day may

be useful in patients with absorptive hypercalciuria, while other patients with idiopathic calcium stones (those of unknown origin) should

avoid an excess of 1 gram of calcium intake per

day (119). Dietary restrictions of oxalate, animal

proteins, and sodium are occasionally prescribed

for patients who have had calcium stones. Table

3 gives some examples of foods high in calcium

and oxalate.

A number of drugs to prevent certain types of

stones exist and are often useful components of

medical management. Evaluations of calcium

stone formers can identify the presence of metabolic risk factors, such as excess calcium and/or

uric acid in the urine, in about 60 percent (33).

Table 3.—Foods Containing High Levels of

Calcium or Oxalate

High calcium High oxalate

Milk

Cheese

Ice cream

Yogurt

Foods containing flour

All beans (except green

beans)

Lentils

Fish with bones, e.g.,

sardines, kippers, herring,

salmon

Dried fruit, nuts

Chocolate, cocoa, Ovaltine,

Horlicks, Bournvita, milk

drinks

Sauces containing milk

Beet root

Spinach

Rhubarb

Parsley

Runner beans

Chocolate, cocoa,

instant coffee,

Ovaltine, tea

SOURCE B.E.C Nordin, A. Hodgkinson, M, Peacock, et al , “Urinary Tract Calculi, ” Nephrobgy, J Hamburger, J. Crosnier, and J, Gtinfeld (eds.) (New

York John Wiley & Sons, 1979)

Treatment of these patients with one or more of

the available drugs has been shown to significantly

alter the natural history of recurrent stone formers

(32,50,118); some researchers believe they can prevent recurring calcium stones in 97 percent of their

patients (130).

Thiazide diuretics, sodium cellulose phosphate,

orthophosphates, potassium citrate, and allopurinol are all medications prescribed to help prevent calcium stone recurrence, although none of

these drugs is appropriate for all patients with calcium stones. Thiazides, for example, decrease the

urinary excretion of calcium by stimulating its

reabsorption in the kidney and are especially useful in patients with excess urinary calcium (104).

Sodium cellulose phosphate, a medication only

recently approved for marketing by the Food and

Drug Administration, prevents calcium oxalate

stone formation by acting as an ion exchange resin

and reducing dietary calcium absorption. Orthophosphates (preparations of acid, neutral, or alkaline phosphates) have been used for some time and

also reduce calcium excretion. Potassium citrate,

another new drug, acts by alkalinizing the urine

and correcting low levels of urinary citrate, which

prevents crystallization of calcium salts. Allopurinol therapy is often used as a preventive therapy

for recurrent calcium stone formers with uric acid

disorders (162).

It is important to note that there is no universal agreement among physicians regarding the effectiveness of the various drug therapies. Some

drugs, such as sodium cellulose phosphate and

potassium citrate, have been in general use for

only a short time. Others, such as the thiazides,

have been in use for some time, but the range over

which they are effective is still not unequivocably established (29). Some researchers have suggested that dietary modification may be a favorable alternative to drug therapy in many patients

with calcium oxalate stones (199).

Medical management of noncalcium stones is

likewise vital to preventing recurring stones. Struvite stones are usually associated with repeated

urinary tract infections and frequently recur. Medical therapy to eliminate these stones once they

have formed has had some encouraging results,

but it has been hampered in wide application by
25

drug side effects and lack of efficacy (207). Prevention of future struvite stones in a patient, however, is usually effective and can be achieved by

the administration of acetohydroxamic acid, a

bacterial enzyme that helps prevent the formation

of struvite stones but has only marginal effects

on formed stones (207). Uric acid stones can often

be associated with an identifiable metabolic disorder, and in these cases dietary limits on animal

protein intake may help prevent stone recurrence.

These patients may also be given medications to

alkalinize the urine. (An alkaline medication can

be as simple as sodium bicarbonate, common baking soda. ) Cystine stones result from an inherited

renal disorder; as with many uric acid stones,

preventive therapy for these stones usually includes administration of an alkaline substance to

buffer the acid urine (44).

Open Surgery

Major surgery to remove stones in the kidney

(nephrolithotomy) or ureter (ureterolithotomy)

has been standard treatment for large or troublesome upper urinary stones for many years. Since

surgery for removal of stones, like any other major surgical procedure, carries a significant morbidity, a small risk of death, and an increased risk

of kidney damage with subsequent surgeries, it

has usually been prescribed only for stones accompanied by intractable pain, severe or recurrent infection, urinary obstruction, or other complications (84). A typical patient undergoing open

stone surgery requires a 10-day hospitalization

and a convalescence of about 6 weeks (129,170).

Problems such as persistent pain, infection, and

obstruction are more common with stones located

in the ureter than with stones located in the kidney, and indications for ureter stone removal

through surgery are consequently clearer. Ureterolithotomy is successful in removing stones in

99 percent of cases, and failures are usually related to surgical difficulties in locating the ureter

or the stone (112). In one series of 445 patients

undergoing ureterolithotomy, 18.4 percent had

surgical complications, including three deaths

(58).

Indications for surgical removal of stones

lodged in the kidney are less clear and often

Photo credit National Institutes of Health, Bethesda, MD

Open surgery for treatment of urinary stones has been

performed for centuries. This lithograph shows such

an operation performed in 1682.

depend on the physician’s judgment regarding

whether the stone is likely to pass spontaneously.

Struvite stones associated with recurrent infections

are an exception, and surgery has been the standard of care (161). A retrospective review of 951

open surgical procedures for stone removal reported an associated mortality rate of 0.6 percent;

serious complications, including hemorrhage in

excess of 1 liter, were found in an additional 13

percent of cases (15), Investigators studying a recent series of 100 patients undergoing nephrolithotomy reported that 4 percent had stones left

behind (18). Partial nephrectomy (removal of part

of the kidney) is necessary to remove some stones
26

and is associated with overall morbidity rates

as high as 40 percent; mortality in one series of

96 patients was 1.7 percent (35). The risk of losing kidney function increases with successive surgeries.

Traditional open surgery for removal of stones

is now on the decline, largely due to the existence

of safer, less costly, and less traumatic alternatives that appear to be equally effective in most

instances. However, it will continue to be the

treatment of choice in a small proportion of cases

not suited to other approaches (134).

Transurethral Manipulation

Removal of urinary stones can be attempted

“from below, ” that is, an instrument can be passed

up through the urethra and the bladder into the

ureter, often making surgery unnecessary. Transurethral procedures are useful primarily for lower

urinary stones; use of these procedures for upper

stones results in fewer successful removals and a

higher complication rate (45). Sometimes tools to

extract the stone are not even necessary since mechanical dilation of the ureter may allow passage

of the stone; simple catheterization (insertion of

a tube) of the ureter, with or without dilatation,

induces spontaneous passage of stones in 21 to

37 percent of cases (112). If passage does not

occur, the stone may be grasped and removed.

Transurethral meatotomy (opening the mouth of

the ureter where it enters the bladder) is indicated

when the stone or grasping instrument is impacted

at the junction of the ureter and the bladder, but

this maneuver should not usually be necessary

(45).

Stones in the lower third of the ureter may be

extracted transurethrally by use of a wire or nylon basket. The success rate of this procedure

varies, but it has been reported to be between 69

and 77 percent in two series of 173 and 121 patients, respectively (95,114). A basket extraction

technique using a specially designed angioplasty

balloon to dilate the ureter had a reported success rate of 95 percent in 39 patients (145). Transurethral removal of stones in the upper portions

of the ureter has been attempted using a variety

‘For the purposes of this study, “transurethral manipulation” includes procedures that extend up into and through the ureter as well.

Photo credit: National Institutes of Health, Bethesda, MD

Some urinary stones can be removed endoscopically,

with tools passed up the urinary tract. A stone basket,

used to trap and extract ureteral stones, can be faintly

seen protruding from the end of a ureteroscope

in this X-ray.

of basketing, grasping, and fragmenting instruments, but the safety and usefulness of this procedure are not yet generally accepted (8,197).

Complications of transurethral extraction techniques include perforation at the junction of the

ureter and the bladder, damage to ureteral integrity, stone movement into the kidney, renal

colic, bleeding, and infection (43). Evidence of

bleeding is present in 10 to 15 percent of cases at

the conclusion of the procedure but is usually no

longer demonstrable 48 hours later (95). Open surgical procedures are required in 5 to 10 percent

of patients after attempted stone removal by transurethral manipulation (95,112,145).

Percutaneous Procedures

Endourologic equipment and techniques developed during the past 15 years allow percutane-
ous access to stones in the upper urinary tract

without resorting to open surgery. In combination with ESWL, these percutaneous or “through

the skin” techniques will most likely replace traditional open surgery for most renal and upper ureteral stones. In the most common form of percutaneous procedure, a tube is passed into the

renal pelvis through a small incision in the lower

back and a variety of techniques may be used to

remove the stone.

Percutaneous nephrostomy (the creation of a

passage to the kidney through a small opening in

the skin) was first described in 1955 (65), but the

technique was not widely applied to the therapy

of urinary tract stones until the late 1970s (167).

Access to the renal collecting system is achieved

by direct puncture under fluoroscopic or ultrasound guidance; a guide wire or catheter is inserted through the needle and advanced down the

ureter to maintain the tract (160). The nephrostomy tract is then progressively dilated under local or general anesthesia. The procedure is frequently performed in two stages, particularly for

stones larger than 1.5 cm (129) or in cases where

bleeding after dilatation obscures visibility, In this

two-stage procedure, nephrostomy and dilatation

are performed first, and further dilatation and

stone extraction are performed at a later time.

However, percutaneous nephrostomy has also

been accomplished as a one-stage procedure (129).

The development and modification of equipment to dilate the nephrostomy tract rapidly and

to destroy stones prior to removal have increased

27

the applicability of percutaneous nephrostomy

(155). Average hospital stays of 5 to 8 days have

been reported for patients undergoing percutaneous stone removal (17, 129,132,151) and may be

declining; outpatient percutaneous lithotripsy has

recently been reported (128).

The nephrostomy procedure and tract dilatation in order to pass the nephroscope are associated with the majority of significant complications

of percutaneous procedures. Stables reviewed the

experience of 1,207 patients and reported a 4-percent incidence of significant complications, mostly

hemorrhage and infection, and one death (166).

In general, most problems with nephrostomy

tubes are mechanical, involving displacement or

blockage. Failed attempts at placement are rare

(142),

The Mayo Clinic, after experience with 1,032

percutaneous manipulations for stone removal,

reported a delayed bleeding rate of nearly 1 percent from significant vascular injuries (120). Seven

patients were treated successfully with transcatheter embolization techniques, two resolved

spontaneously with observation, and one underwent an emergency flank exploration resulting in

nephrectomy (120). Other researchers have found

that perforations of the renal collecting system

usually heal spontaneously after 24 to 48 hours

(18). Percutaneous lithotripsy using ultrasound instruments does not appear to negatively affect the

function of the operated kidney, at least in the

short run (101).

INSTRUMENTS FOR STONE DESTRUCTION AND REMOVAL

Mechanical and Chemical Removal

A variety of mechanical tools is available to

crush or extract stones, Loops and wire baskets

to ensnare stones are standard supplementary

tools for transurethral manipulation of lower

ureteral stones, although their usefulness in transurethral manipulation of upper urinary stones is

debatable (45). Wire baskets and forceps are useful

adjuncts to percutaneous renal stone extraction

(97,160), and a “stone punch” to mechanically

crush the stone has also been successfully employed in a percutaneous procedure (159). Although “power lithotripsy” to fragment stones for

easy passage or removal is becoming common,

mechanical removal is likely to remain an option

for small stones and large fragments, particularly

for lower urinary stones.

Chemolysis, the prolonged application of drugs

to a stone to dissolve or reduce it, has not been

widely accepted as a therapeutic alternative to sur-
28

gical or mechanical removal. The long hospital

stay (up to 2 months) necessitated by irrigation

therapy, which is usually administered through

a nephrostomy tract, limits the usefulness of the

technique. However, chemolysis does seem to

have a role in certain situations. In one series of

150 patients with symptomatic stones treated by

percutaneous chemolysis, for example, complete

dissolution was achieved in 70 percent and

another 15 percent had only tiny fragments remaining (122). Progress was monitored every 3

to 4 days by X-rays, and the total duration of irrigation was 1 to 4 weeks (122).

Struvite, uric acid, and cystine stones are the

most amenable to chemolysis (160). Some calcium-containing stones can also be dissolved in

this manner, but calcium oxalate and calcium

phosphate stones resist dissolution therapy (160).

Chemolysis carries with it a substantial risk of infection, and death as a result of complications is

not unknown (152). Nonetheless, the procedure

seems to have a place in the urologist’s armamentarium. Combination therapy with ESWL has

been attempted by at least two groups (47,149),

and it may be a comfortable niche for future application of chemolysis,

Electrohydraulic Lithotripsy

Electrohydraulic lithotripsy is the oldest form

of “power” lithotripsy. The electrohydraulic

lithotripter releases high impulse discharges from

an electrode at the tip of a flexible probe, which

is placed next to the stone. The shock waves generated by these discharges are of sufficient force

to disrupt the hardest stone. Electrohydraulic

lithotripsy has been used with both transurethral

and percutaneous endoscopic techniques.

Transurethral electrohydraulic lithotripsy is a

highly effective means of bladder stone removal

and has become an accepted practice for this use

(108). Application of electrohydraulic lithotripsy

to percutaneous techniques has been limited to

small series (30,63), and there is far less reported

experience than for ultrasonic lithotripsy (see below). The electrohydraulic lithotripsy probe must

not be used 5 mm or closer to soft tissue or severe damage will result, making it inappropriate

in most cases for ureteral stones (106). However,

it may be useful for fragmenting stones in the renal pelvis and calices. A British group has reported

the safe removal of such stones in 17 patients without a single perforation, and they believe that electrohydraulic lithotripsy is superior to ultrasonic

lithotripsy for all but very soft stones (107).

Ultrasonic Lithotripsy

Percutaneous ultrasonic lithotripsy was first

performed in 1977 (87), but clinical experience has

expanded greatly since that time (13,17,18,30,151),

and the safety and usefulness of the technique are

widely accepted (8). The ultrasound probe emits

high-frequency ultrasonic energy that has a simple drilling effect upon direct exposure to the stone

(155). Direct contact of the probe tip and stone

is essential for effectiveness of ultrasonic lithotripsy. A suction channel is attached to the hollow probe in order to continuously remove stone

fragments, an advantage of ultrasonic over electrohydraulic lithotripsy (97), Transurethral application of ultrasonic lithotripsy to bladder stones

is considered effective (79), and experience with

stones in the ureter and renal pelvis is expanding

rapidly.

As with

lithotripsy

cutaneous

many technologies, use of ultrasonic

as the stone removal technique in perprocedures demonstrates a “learning

Photo credit National Institutes of Health, Bethesda, MD

Kidney stones can be fragmented and removed

through a percutaneous tract using ultrasonic

or electrohydraulic probes, requiring only

a small incision.
29

—

curve” effect for both efficacy in removing stones

and reduction of serious complications (150,204).

A number of groups have reported considerable

experience with this method. Segura and colleagues successfully removed 96 percent of 148

kidney stones and 86 percent of 50 ureteral stones

by percutaneous ultrasonic lithotripsy (151). Major complications were encountered in 3.2 percent

of this series, including two patients who required

open surgery (1.51 ). Brannon and colleagues have

reported their 2-year experience with 250 consecutive patients, in which targeted stones were removed in 97 percent of patients by percutaneous

ultrasonic lithotripsy (18). A repeat nephrostomy

was performed in 20 patients (8 percent), and 32

patients (13 percent) required an additional procedure (e.g., transurethral manipulation) to remove the stone. The overall complication rate was

6.8 percent, but significant delayed bleeding

occurred in eight patients (3.2 percent), and three

of these required angiographic embolization to

control hemorrhaging (18).

A community hospital urology group has reported an 87 percent success rate in removing

stones from 38 patients by percutaneous ultrasonic

lithotripsy, with an overall complication rate of

7.8 percent (13).

Experimental Endoscopic Lithotripsy

Instruments

Laser lithotripters and and microexplosion techniques are being investigated as potential methods to fragment stones endoscopically, but both

are currently still in the early experimental stages.

Lasers are being investigated as a power source

to fragment stones extracorporeally as well as endoscopically, but neither method has yet undergone clinical trials (11 ,201,202). Microexplosion

lithotripsy, based on a small controlled explosion

incorporated into a catheter that creates shock

waves, is also being investigated as a possible

method of fragmenting urinary stones. It has been

used on a small number of patients in Japan with

bladder stones, with some success. The small

number of bladder stones in developed countries

makes ureteral and renal stones the more widespread goal of this therapy, but these uses are still

highly experimental (200).
Chapter 4

ESWL: Efficacy, Safety, and

Regulation by the Food and

Drug Administration
Chapter 4

ESWL: Efficacy, Safety, and Regulation by

the Food and Drug Administration

INTRODUCTION

Extracorporeal shock wave lithotripsy (ESWL)

is a novel approach to stone treatment; it has existed only since the beginning of the 1980s and

is unlike any of the other alternatives in either cost

or character, Currently approved for use only for

stones in the kidney and upper ureter, it has the

potential to be extended to treatment of lower urinary stones, gallstones, and, possibly, a diverse

range of other medical problems. Only one manufacturer, Dornier Medical Systems of West Germany, presently has approval to market an ESWL

device in the United States. However, at least

three American firms, as well as manufacturers

in other countries, are working on their own extracorporeal lithotripters.

This chapter first describes the Dornier lithotripter and its early development in West Germany. It then discusses the investigational period

of the device in the United States that culminated

in the Food and Drug Administration’s (FDA) premarket approval of the device in December 1984.

The next section of this chapter summarizes the

current status of ESWL and the evidence on its

safety and efficacy. The final section concludes

with a brief discussion of other ESWL devices currently under development in the United States and

potential future applications of ESWL.

DESCRIPTION OF THE DORNIER “ “-m ‘

-

LI I HU I HIP I Et+

In the Dornier lithotripter, shock waves are

generated outside of the body and transmitted

through water and the outer tissues of the body

to the stone in the kidney or upper ureter. Immersion of the patient in a water bath allows the

shock wave to pass from the generator (an electrode) to the patient without either damaging tissue or damping the wave, since water and tissue

have similar acoustic impedance properties. The

water’s temperature, gas content, and conductivity are controlled by a treatment system in the

lithotripter (187).

The shock waves are generated by an underwater spark from an electrode located at the first

geometric focus of a semi-ellipsoidal reflector. The

stone is positioned at the second focus of the

reflector, which is the point of highest energy density. A two-dimensional radiographic scanning

system, using two X-ray units, and a patientpositioning system ensure proper location of the

stone. The force generated by the shock wave is

concentrated on a spherical area 2 cm in diameter

(the second focus). A large pressure zone is created as the shock wave passes from tissue or urine

into the stone. This pressure exceeds the strength

of the stone material and causes its destruction.

Repeated shock wave applications result in the

fragmentation of a stone into small pieces (2 mm

or less), which normally are passed spontaneously

out of the body in the urine (187).

Each ESWL treatment may use from less than

1,000 to more than 2,500 shocks. The shocks are

synchronized with the patient’s heart rhythm, as

monitored by an electrocardiogram, and are delivered during the contraction of the heart, when

it is not responsive to electrical stimuli. This arrangement avoids the complications, experienced

in the early clinical trials, of triggering arrhythmias of the heart (22). Appendix C describes the

properties of shock waves and the design of the

Dornier lithotripter in more detail.

33
34

Photo credit: Dornier Medical Systems, Inc., Marietta, GA

In the Dornier Iithotripter, shock waves produced by a spark-gap electrode travel through a water bath and the body

of the patient to the point of the urinary stone.

EARLY STUDIES OF ESWL1

Shock waves are phenomena closely identified

with studies of explosions and of aerospace; the

force created by a jet breaking the sound barrier,

for example, is a shock wave. Accordingly, a West

German aerospace firm (Dornier) was the first to

successfully apply extracorporeal shock wave

technology to treatment of urinary stones.

The fundamental problem to overcome in early

studies of ESWL was focusing the wave on the

stone without causing other tissue damage or lessening the power of the wave to the point where

1This section and the one following draw extensively from J.A.

Showstack, E.J. Perez-Stable, and E. Sawitz, “Extracorporeal Shock

Wave Lithotripy: Clinical Application and Medicare Physician Paymerit, ” paper prepared for the Office of Technology Assessment,

Washington, DC, Aug. 1, 1985.

it was not effective (22). Initial in vitro studies

of stone fragmentation were performed on stones

freely suspended in a water-filled plastic bag.

Studies in rats showed that shock waves caused

destruction of lung tissues, but no trauma to other

biological tissues. Studies in larger animals supported the finding that the kidney itself was not

harmed by the shock waves, but they also were

not successful in every case at fragmenting the

stones into pieces that could be spontaneously discharged. The animal trials did result in a rejection of ultrasound in favor of X-rays as a reliable

method of imaging the precise location of the

stone (22).

The first description of clinical experience with

ESWL was published in 1980. In a series of 23 pa-
35

Photo credit Dormer Medical Systems, Inc

The location of the stone in the Dornier Iithotripter is defined in two dimensions by X-ray devices

that are attached to the Iithotripter.

Marietta, GA

tients with upper urinary stones treated with

ESWL, 20 patients had stones that were successfully destroyed by ESWL and expelled spontaneously, Only two of these patients were reported

as having renal colic after the procedure, but

hematuria was present in all (23). The three

failures in this series (two patients with ureteral

stones and one with a staghorn stone) all required

subsequent open surgical procedures (23). Although general anesthesia was used in 65 percent

of the patients in this series, eight of the last nine

patients undergoing ESWL were given only

epidural (regional) anesthesia.

Updates on clinical experience with ESWL were

published in 1982 and 1983, demonstrating very

positive results with renal stones but less success

with ureteral stones (25,26). Not all patients with

renal stones were selected for ESWL. The initial

exclusion criteria in selecting patients were: 1) obstruction of the urinary tract, 2) infection of the

urinary tract, 3) stones larger than a cherry, 4)
36

—

insufficient contrast density for precise localization (the stone could not be seen clearly enough

on X-ray to position the patient precisely), and

5) existence of other significant medical problems

(22). Thirty-nine percent of the first 206 patients

treated with ESWL had previous surgery on the

treated kidney for stone disease (25).

A third update in 1983 reported on 498 patients

(24). A 3-month post-ESWL evaluation showed

90 percent free of stones, 9 percent with residual

stones of small size, and only 1 percent (four patients) requiring open surgical procedures (24).

The composition of stones treated with ESWL was

reported as 80 percent calcium containing, 15 percent struvite, and 5 percent uric acid or cystine,

approximately the same as the distribution of

stone types in the population. In mentioning successful subsequent treatment of 30 patients with

ureteral stones, the investigators emphasized that

all of these stones had moved into the ureter 6

weeks or less before ESWL treatment (24).

In 1984, Chaussy and colleagues summarized

the Munich experience with 945 patients undergoing 1,068 ESWL treatments (27). Three months

after ESWL, 89.5 percent of patients were free of

stones, 10 percent had detectable stones on radiographic evaluation, and 0.6 percent had undergone open surgery. To achieve this efficacy rate,

adjuvant procedures were necessary in 76 patients

(8 percent); transureteral manipulations were conducted in 33 (3 percent), and percutaneous nephrostomy was necessary in 43 (5 percent) (27).

One ESWL treatment was sufficient in 87 percent,

but 11 percent and 2 percent of patients underwent two and three treatments, respectively (27).

Although the high proportion of treated patients with previous surgery on the affected side

indicates a patient population of recurrent stone

formers with severe symptoms, information is

lacking on patient selection and severity of symptoms before ESWL treatment. The early exclusion

criteria were eventually discarded, and the only

remaining contraindication noted in the 1984 update was “pathologic drainage conditions” below

the stone and location inferior to the iliac crest

(in the lower part of the ureter, where visualization of the stone is difficult because of the intervening pelvic bone) (27). More than 100 ureteral

stones were treated successfully with ESWL when

their presence in the ureter did not exceed 6 weeks

(27).

REGULATION BY FDA AND CLINICAL TRIALS

IN THE UNITED STATES

FDA regulates the introduction of drugs, medical devices, and biological products onto the market in the United States. Whenever a manufacturer wishes to market a new medical device, or

an old device with new features or uses “that could

significantly affect the safety of effectiveness of

the device” (21 CFR 807), the manufacturer is required by section 510(k) of the 1976 Medical Device Amendments to notify FDA. If the device is

found by FDA to be “substantially equivalent” to

a preenactment device, it may be marketed. If not,

it automatically becomes a class 1112 device and

‘The 1976 legislation established three classes of medical devices;

class 111 contains those devices for which general controls are insufficient to ensure safety and efficacy, information does not exist

to establish a performance standard, and there is a potential for harm

(179).

requires premarket approval before it can be marketed. To receive premarket approval for a device, the manufacturer must submit an application to FDA showing the results of clinical trials

and other safety and efficacy information (179).

In order to conduct a clinical trial (using human subjects) in the United States with a device

that has not been approved for marketing and that

poses a “significant risk” to users, the manufacturer must obtain an investigational device exemption (IDE) from FDA (85), In principle, the manufacturer must not make a profit by selling the

device until the device has premarket approval,

although this rule is difficult to enforce. When

sufficient data have been collected, the manufacturer submits a premarket approval application
that includes the evidence of its safety and efficacy

and labeling information for the device. Once

FDA finds both the evidence and the labeling to

be acceptable, it gives the manufacturer approval

to market the device (179).

The Dornier company, which had been conducting clinical trials of ESWL in West Germany

since 1980, submitted an IDE request to conduct

trials in the United States in September 1982 (42).

The IDE was granted by FDA in April 1983, and

clinical investigations commenced at the Methodist Hospital in Indianapolis, Indiana, in February 1984 (203). The investigations were extended shortly thereafter to five more U.S.

hospitals: Massachusetts General Hospital in Boston, Baylor University College of Medicine-Methodist Hospital in Houston, New York HospitalCornell Medical Center in New York, University

of Virginia Medical Center at Charlottesville, and

University of Florida-Shands Teaching Hospital

in Gainesville (3). Though FDA did not require

that U.S. data be presented in Dornier’s premarket approval application, the U.S. trials served

the dual purpose of supplementing the German

data in the premarket approval application and

of allowing the U.S. medical community to become familiar with the device.

The research protocol under the IDE called for

each hospital to treat two successive categories

of patients. Patients in the first category were required to have the following characteristics:

●

●

●

●

●

●

a single stone, located in the renal pelvis or

calices, that showed up as densely opaque

under X-rays and measured less than 2 cm

in its longest axis,

urine that could be sterilized with antimicrobial agents before treatment,

no obstruction in the urinary tract below the

position of the stone,

normal body structure with no more than 30

percent excess body fat,

no major coexisting diseases, and

no significant calcification of the aorta or renal artery.

Once an investigational site had treated 50 such

patients, the IDE protocol allowed the treatment

of patients with more complicated symptoms, includ ing:

●

●

●

●

37

multiple renal stones,

stones larger than 2 cm in axial length,

upper ureteral stones, and

radiolucent stones (less easily visualized with

X-rays) (42,187).

The Gastroenterology -Urology Devices Panel,

an advisory panel to FDA, met on May 31, 1984,

to consider evidence thus far on the Dornier

lithotripter (187). At that time, 317 patients i n

three U.S. hospitals had been treated with ESWL.

Of these, 32 (10 percent) had required two ESWL

treatments and 3 (1 percent) had required three

treatments. Three patients had experienced minor complications (pancreatitis and urosepsis)

associated with the treatment, but all recovered

uneventfully in a few days. There were no deaths.

The panel, after considering the German data and

these corroborative reports, recommended approval of the device subject to minor technical adjustments, labeling requirements, and the submission of followup clinical investigation data and

a postmarketing surveillance plan (187).

FDA approved the Dornier lithotripter for marketing in the United States on December 19, 1984

(187). The approved labeling of the lithotripter

states that the device should not be used for patients who:

have lower ureteral stones, bladder stones,

or gallstones;

cannot undergo either general or peridural

anesthesia

should not be exposed to radiation, such as

pregnant women;

have an anatomy that precludes adequate imaging to focus the stone, such as patients with

curvature of the spine or excess body fat;

have a urinary obstruction below the position of the stone;

have a pacemaker; or

have renal artery calcification on the side to

be treated (187).

This labeling limits Dornier’s promotion of its

ESWL device to treatment of kidney and upper

ureteral stones. FDA regulations prohibit Dornier

from labeling the lithotripter for a new use, such

as treatment of stones in the lower ureter, without further proof of the device’s safety and efficacy when employed for that purpose. However,
38

FDA cannot prevent physicians from using the

Dornier lithotripter for such a use.

The approval of the Dornier lithotripter was

announced with great fanfare. The Department

of Health and Human Services (DHHS) held a

press conference that extolled the virtues of the

lithotripter and that was attended by both the Secretary of DHHS and the FDA Commissioner. The

device was described by the Secretary as an

“authentic modern miracle” that would both lower

costs and enhance quality of care (186); it was heralded by the press with headlines such as “KidneyStone Crusher Hailed” (143) and “Lithotripsy

Smashes Kidney Stones and Health Care Costs”

(91).

The FDA regulatory process probably did little

to hinder the introduction of ESWL in the United

States. Dornier received approval to conduct clinical trials into the United States in April 1983

(203), but the company did not begin them until

early 1984 simply because it had no machines to

deliver (125). The Dornier lithotripter’s brief investigational period in the United States was probably as important to introducing the device to

U.S. medicine and potential purchasers as it was

to providing additional data to FDA. It is ironic

that this technology, which had a relatively

smooth passage through the FDA regulatory process, should be later cited as an example of FDA

bureaucracy and overregulation, One commentator has called FDA to task for the fact that the

Dornier lithotripter “had already been used for

two and a half years in West Germany before the

FDA bureaucracy began to evaluate it” (61), despite the fact that FDA had no jurisdiction over

ESWL until the manufacturer decided to take steps

toward marketing the device in the United States.

SAFETY AND EFFICACY OF ESWL: CURRENT STATUS

ESWL has already emerged as the preferred

treatment among many urologists for most upper urinary stones (54,133). This enthusiasm is

based on data showing up to 95 percent effectiveness in eliminating stones in patients for whom

ESWL is selected, when ESWL is used either as

a single modality or in conjunction with other

techniques (22,57,90,137). The complete avoidance of a surgical incision and the short period

of convalescence adds to ESWL’s attractiveness

and have been featured in well-publicized reports

of patients who have undergone the procedure

(28).

During 1984, more than 7,000 ESWL treatments

were performed around the world, including

about 2,400 procedures at six centers in the United

States (11). By October 1985, over 50,000 treatments at over 90 ESWL centers worldwide had

been performed (81), and the number has continued to climb. As mentioned above, the available data on the world experience to date indicate that up to 95 percent of patients are free of

stones 3 months after ESWL. An adjunct procedure is necessary in 10 to 25 percent of patients

to achieve this degree of success, and 10 to 15 percent require more than one ESWL session. Recurrence rates with ESWL of new symptomatic stones

have not been reported. Also, the role of medical management and preventive measures after

ESWL has not been addressed in the literature.

The U.S. experience reported in the literature

appears to corroborate the German reports used

as the basis for Dornier’s application to FDA. At

Methodist Hospital in Indianapolis, 500 patients

had undergone ESWL treatments for stones in the

kidney and ureter by July 1985; only 14 percent

were completely stone-free at discharge from the

hospital, but at 3 months 75 percent had no radiographic evidence of stones (90). The proportion

requiring secondary stone manipulations was 7.5

percent, but only five patients required a percutaneous approach. Repeat ESWL was necessary

in 9 percent. Open surgery for stone removal was

necessary in one patient (90).

Researchers in the New York Hospital-Cornell

University ESWL unit have reported that, in 467

patients undergoing 518 treatments, 92 percent of

disintegrated stones passed spontaneously after

ESWL (138). Twenty-three percent of treatments

required prior cystoscopic procedures, with FDA

category B stones more likely to need these pro-
39

cedures (137). (These stones include those that are

greater than 2 cm, are located in the ureter, are

partial or complete staghorns, and are accompanied by infection). Seventy-five percent of patients

were stone-free after 3 months, Complications included colic, vomiting, infection, and one symptomatic perirenal hematoma requiring blood

transfusion (137).

A West German group has recently reported

on 750 patients receiving ESWL treatments; stone

disintegration was achieved in 99.1 percent, while

0.6 percent underwent percutaneous nephrolithotomy alone and 0.3 percent open surgery

(57). Immediate secondary measures were necessary in 16 percent, including repeat ESWL treatments. X-ray evaluations 3 months after ESWL

showed that 85 percent of patients were stone-free;

a second ESWL session was required in 3 percent

of cases (57).

Open surgery for stone disease will likely be

used for relatively few patients in the future. Percutaneous nephrostomy with ultrasonic lithotripsy, the most likely alternative to ESWL for upper urinary stones, is effective in 95 percent of

upper urinary stone cases but carries a risk of serious complications greater than that for ESWL.

Bleeding from trauma to vascular structures occurs in 1 percent of percutaneous nephrostomy

cases (120) compared to an approximately 0.6 percent incidence of similar complications (usually

perirenal hematomas) from ESWL (27). On the

other hand, concomitant procedures are more

likely to be necessary with ESWL than with percutaneous nephrolithotomy. ESWL is rapidly becoming the preferred treatment for many stones

in the renal pelvis or calices that cannot be adequately treated with drugs, but percutaneous

nephrolithotomy is also being widely adopted,

The precise clinical indications for one treatment

rather than the other, when only a single treatment modality is necessary, are still unclear.

Stones located in the ureter are more difficult

to manage than stones in the kidney, and only

those in the upper portion of the ureter are common candidates for ESWL. Some stones found initially to be in the lower ureter (below the iliac

crest) can be moved, through transurethral

manipulation, to the upper ureter or renal pelvis

where ESWL is effective (105). Direct application

of ESWL to lower ureteral stones is currently being tried on an experimental basis (82). Ureteral

stones lodged in the same place for more than a

few weeks are not removed effectively by ESWL

(24,47). A combination of transurethral or percutaneous procedures and ESWL may be expected

in a greater proportion of ureteral than renal

stones (137),

ESWL, alone or in combination with secondary procedures, can remove over 85 percent of

ureteral stones (137), but many of the advantages

of the noninvasive procedure (ESWL) are lost

when a second, invasive procedure (such as percutaneous ultrasonic lithotripsy) is required (155).

Still, ESWL in combination with percutaneous

stone removal is probably less tramatic than open

surgery (89) and is likely to replace open surgery

for many ureteral stones.

The U.S. experience with ESWL offers one encouraging fact: many of the adjunct manipulations have been transurethral and not percutaneous. This fact may be due in part to the use

of prior transurethral manipulation of ureteral

stones to make them amenable to ESWL treatment. Nevertheless, emphasizing transurethral

rather than percutaneous approaches can limit the

risks involved with adjunct procedures performed

before or after ESWL, since transurethral manipulations are considerably safer than are percutaneous procedures (155).

The safety of ESWL in the short run has been

well established, and morbidity from the procedure compares favorably with open surgery and

percutaneous techniques (88). Some patients have

pain when passing the fragments, which may be

treated with oral or intramuscular medication,

and some morbidity from anesthesia is expected

(155); one patient in the United States has died

from anesthesia complications (203). Radiation

from the X-ray system is a concern, but it is less

per treatment than with percutaneous lithotripsy

(58). Furthermore, it is comparable to the radiation required to visualize a stone before and during open surgery3 if ultrasound rather than X-rays

are used for post-ESWL imaging (58).

‘Radiography is sometimes used to identify the location of a stone

during surgery. Intraoperative ultrasonography is also occasionally

used (98)
40

The long-term effects of ESWL, including the

effects on the kidney of repeated ESWL treatments, are still in need of study (155). One major concern regarding long-term effects is that between 10 and 25 percent of patients treated with

ESWL still have residual stones (visible on plain

X-rays) at 3 months (27,57,90,137). These fragments (“stone dust”) may act as a nidus for new

stone formation and lead to higher recurrence

rates than would otherwise have occurred. Recurrence rates of 40 to 60 percent have been reported

after open surgical procedures (100), implying that

combining medical management and preventive

measures with any surgical or ESWL treatment

of stone disease is very important (130).

The majority of stones to be treated by ESWL

will be calcium containing. Besides being the most

frequent type of stone encountered, calcium stones

are radiographically dense and often fairly small,

making ESWL a likely first choice for therapy.

ESWL may also be important in treating certain

struvite stones, which can grow to enormous size.

A combination of ESWL, and percutaneous lithotripsy has been proposed as the optimal therapeutic approach for many of these stones (89,137).

Cystine stones are more difficult to treat with

ESWL, because they are not as brittle as other

stones and do not fragment as easily. Two groups

have reported using chemolysis in combination

with ESWL to disintegrate cystine and struvite

stones (47,149).

The distribution of treatment modes used for

urinary stones is still changing rapidly as more

experience with both ESWL and percutaneous

stone removal on a wider variety of patients (and

with a wider variety of urologists performing these

procedures) accumulates. For example, early

ESWL treatments employed around 500 to 1,000

shocks per patient (26). An average of about 1,300

shocks per patient in the United States was reported in mid-1985 (11), and an average of 1,600

shocks per patient in 16 surveyed hospitals was

reported in April 1986 (40), indicating that increasingly more difficult stones are being successfully treated with ESWL. The average may continue to climb as more centers regularly perform

ESWL on difficult stones; or, it could stabilize or

even decline if patients with simple stones who

would not have been recommended for surgery

in the past nevertheless are recommended for the

less traumatic ESWL. A likely scenario is that both

percutaneous and extracorporeal lithotripsy will

be employed as an alternative to open surgery for

many patients with very large or difficult stones.

The role that ESWL may play in the management of urinary tract stones is illustrated by the

experience of the Stuttgart, West Germany Stone

Clinic. During the first 11 months after the introduction of an ESWL unit, 1,302 patient were

treated and 762 (58.5 percent) received ESWL

(105). Kidney stones were found in 877 patients,

and 77.5 percent of these were treated with ESWL

alone. An additional 19 percent of kidney stone

patients were managed with a combination of

ESWL and percutaneous nephrolithotomy. ESWL

treatment of ureteral stones was limited to those

located above the iliac crest, and thus ESWL was

applied in only 19.3 percent of ureteral stones.

A total of 80 patients (6.1 percent) required open

surgery. The referral nature of the Stuttgart patients limits the applicability of this experience to

the general population of patients with upper urinary stones. The Stuttgart report, however, does

bear out the central role of ESWL in the management of stone disease.

The Stuttgart experience can be contrasted with

the experience of an American hospital with

ESWL during the investigational phase of the Dornier lithotripter in the United States. Researchers

from this hospital reported the following distribution of alternative treatments among 304 patients: 37 percent received simple one-treatment

ESWL, 35 percent required a second ESWL treatment or a supplementary transurethral manipulation, 13 percent received simple percutaneous

nephrolithotomy, 10 percent received percutaneous nephrolithotomy with or without adjunct

ESWL to treat staghorn stones, and 4 percent required open surgery for stones (109). Thus, approximately three-quarters of upper urinary stone

patients at this hospital were treated with ESWL

during its introductory phase, either alone or in

conjunction with other treatment modes.

These experiences suggest that open surgical

procedures for upper urinary tract stones may

well be reserved in the future for less than 10 percent of all patients requiring more than conserv-
41

ative medical management, What is not yet clear

is the mix of ESWL and endoscopic procedures

that will be used to treat the remaining 90 percent or more, and the extent to which the availability of these procedures will encourage more

aggressive management of stones. No randomized

clinical trials comparing ESWL to other treatments

for upper urinary stones have been performed;

such investigations could greatly assist medical

decisions regarding the appropriate applications

for the various alternatives.4

4

1n a randomized clinical trial, patients with a common condition (e. g., a kidney stone of particular size and type) are randomly

assigned into two or more treatment groups. Statistical tests can

then he perfomed on the aggregatt results of the treatments to determ]ne which is more effec tlve ( ] 77).

OTHER EXTRACORPOREAL SHOCK WAVE LITHOTRIPTERS

At least three U.S. manufacturers are developing ESWL devices, with quite a bit of diversity

in components. As of December 1985, only one

manufacturer (Medstone) had begun clinical trials

( 103). The devices, summarized in table 4, are ex

-

pected to be cheaper and more versatile than the

Dornier lithotripter, but whether they prove to

be as effective remains to be seen. All of the devices under development use shock wave energy

to fragment the stones, but they produce the

energy in different ways. They differ in two other

important ways as well: in the acoustic interface

(whether the patient is actually in a water bath

or whether some other means is used to convey

the shock wave) and in the imaging equipment

used. Since precise imaging is a vital component

of ESWL, advances in imaging can have a substantial effect on the technology. An important

factor to demonstrate in the clinical trials of ESWL

devices under development is the ability of less

Table 4. —Extracorporeal Shock Wave Lithotripters

Under Development in the United States,

December

. —

Medstone -

Characteristics International

Shock wave generator Spark gap

Imaging system X ray

Acoustic interface Fluld-filled

bag

State of development Clinical

trials

1985

Developer

Northgate International

Research Biomedics

Spark gap Laser

Ultrasound X-ray

Flu(d-filled Water- filled

bag chest waders

Animal Animal

studies studies

SOURCES A mer!can Urologlc Association, Report to fhe American (/ro/og,ca/

Assoc/af/on Ad Hoc Cornrr?J1/m? To Study the Safety and C)jnjca/ Ef

f~cacv of fhe Current Techrro/ogy of Percutaneous L/thofripsy, and

Non /nvas/ve L/tho(ripsy (Balt!more, M D AUA May 16, 1985] G

Cllsham Medstone International Inc San Diego, CA, personal com

mun!cat Ion, October 1985, W Shene Monaghan Medical, Plattsburgh

NY personal communlcat!on November 1985

costly equipment to produce a rapid and accurate

image of a stone’s position.

The impacts on these new devices of FDA premarket requirements are twofold. First, they ensure that future ESWL devices on the U.S. market will meet some standard of safety and efficacy.

Second, they force developers to consider the time

necessary to conduct scientifically valid clinical

trials when anticipating the speed with which the

developers can introduce their devices on the open

market. All new ESWL devices must undergo extensive clinical testing before FDA approval. With

the possible exception of Medstone’s device, which

could conceivably be awarded premarket approval in late 1986, none of the U.S. lithotripters

is likely to be available for general marketing before 1987, Even Dornier, which submitted its

premarket approval application largely on the basis of 4 years of West German data, had its device in clinical trials in the United States for 10

months before the lithotripter received formal

premarket approval.

There are qualifications to both of these impacts. Although FDA standards require a certain

level of safety and efficacy, they do not affect

other aspects of a device related to quality, and

the future spectrum of ESWL devices may demonstrate a range of differences in attributes such

as imaging clarity and average time required per

procedure, The potential cost vs. quality tradeoffs of alternative ESWL devices cannot be evaluated in advance. Also, the necessity of conducting thorough clinical trials for FDA purposes will

not slow the development of alternative devices

whose manufacturers would have conducted trials

for marketing purposes in any case. FDA regula-
4 2

tions do not prevent manufacturers from distributing some ESWL devices before premarket approval, because they permit the distribution of

devices necessary to conduct the clinical investigations. Still, the FDA premarket approval process acts to ensure that Dornier is the only unrestricted seller until the next ESWL device obtains

approval. Thus, Federal policies that regulate the

marketing of medical devices could ultimately

have some effect on the overall distribution of the

Dornier lithotripter relative to other ESWL devices. The primary determinant of distribution,

however, will probably remain Dornier’s advantage of being the initial manufacturer of the

device.

U.S. manufacturers are not alone in developing new ESWL devices; other manufacturers

around the world are also developing products

for the ESWL market. For example, Yachiyoda

Industry in Japan is working on a water bath

ESWL unit (1). The use of microexplosive pellets

for endoscopic lithotripsy, described briefly in

chapter 3, is a Japanese innovation with potential application to ESWL.

A French company, EDAP, is developing a unit

that uses ultrasound imaging equipment and a

water-filled pouch instead of a bath to transmit

the shock waves (2). The shock waves in the

French device are produced by a series of piezoelectric transducers, s which need not be frequently

5When voltage is applied to a piezoelectric transducer, it causes

a crystal in the transducer to expand. Shock waves can be created

by the repeated expansions and contractions of this crystal.

replaced. If this method of wave generation proves

to be effective, it may be less expensive than the

spark-gap generator used by most other manufacturers to produce the wave energy.’ EDAP is

currently conducting clinical trials in France and

expects marketing approval in that country to be

imminent; it anticipates beginning clinical trials

in the United States in 1986 (2). A second French

company has recently announced the development of its own ESWL device (110). Given the

anticipated market for ESWL in the world, it is

likely that other manufacturers are investigating

ESWL as well.

Research on extended applications of ESWL is

rapidly expanding. The current model of the Dornier lithotripter is in clinical trials in the United

States for use on lower urinary stones (82), and

a new model to be applied to gallstones is undergoing clinical trials in West Germany (93,147). In

addition, U.S. researchers have discovered that

shock waves can destroy cancer cells in vitro and

delay tumor growth in animals, a finding with potentially significant medical implications (144).

Applications such as the use of shock waves to

treat arteriosclerotic plaque are other promising

areas of research (173).

‘The spark-gap electrode in the Dornier Iithotripter usually must

be replaced at least once during each procedure; Medstone’s electrode is predicted to need replacement for each new procedure

(11,31).
Chapter 5

The Costs and

Economics of ESWL
Chapter 5

The Costs and Economics of ESWL

INTRODUCTION

The costs and economics of providing extracorporeal shock wave lithotripsy (ESWL) are central

to public policies regarding this technology. Lower

provider costs can lead to lower health care expenditures, an important goal of payment policies.

Also, to the extent that the total system costs of

ESWL are minimized, resources are freed for other

uses, The interaction between provider costs and

public policies works both ways; the decisions of

health care payers and planners can affect the cost

of providing ESWL, because these policies influence decisions to purchase and use the technology.

ESWL equipment is very expensive to purchase

and maintain. Consequently, if only a few patients are treated, the cost to the ESWL center of

treating each patient is high; as more patients are

treated, per-patient costs decline. But the economics of ESWL involve more than a consideration of facility costs. Professional costs are also

vital because patients are referred to ESWL centers

by physicians, and physicians perform the procedure. Physicians’ access to ESWL and their income from performing ESWL relative to other

treatment technologies, which depends on relative costs and payment rates, affect their willingness to recommend and perform ESWL treatment.

As background for the discussions of payment

and planning policies and their implications, this

chapter reviews the available literature on the current costs of ESWL to hospitals, physicians, and

other providers, and to some extent to patients. 1

Constraining this review is the fact that the literature on ESWL costs is very sparse, and the fact

‘Unless otherwise specified, “cost, ” as used in this chapter, refers

to the resource costs to the provider for the inputs purchased, Hospitals and other facilities purchase inputs such as supplies, employee

time, and equipment; physicians’ costs include time, educational expenses, and office overhead. “Charges” are the prices that providers

that the resource costs of many of the components

of hospital and physician services are unknown

or controversial. For example, the dollar value of

costs such as physician time can be calculated in

several ways; a physician’s own charges can be

interpreted (after accounting for overhead) as the

value that he or she places on the time spent providing a service. Consequently, charges are often

used in the medical literature as a proxy measure

of costs. The proxy may sometimes be a very poor

one, and the charges reported here do not necessarily indicate the actual input costs to physicians,

hospitals, or other facilities of providing any one

technology. Charges as well as costs are nevertheless discussed in this chapter because in many

cases they are the only cost-related information

available, because they may give some indication

of the relative costs of providing one technology

compared to another, and because they matter to

many payers of health care services.

The costs of providing ESWL vary greatly with

the number of patients treated, the site of care,

the device used, and the mix of physicians and

technicians performing the procedure. The first

part of this chapter reviews the major components

of the costs of ESWL to the hospital or other purchaser and discusses the implications of ESWL’s

high fixed costs. The chapter then describes the

costs and economics of physicians’ ESWL services. Finally, it discusses comparative costs and

charges for alternative technologies to treat upper urinary stones, including the disability time

(hospitalization and recuperation) associated with

ESWL and with its alternatives.

(hospitals, ambulatory treatment facilities, and physicians) attach

to their services and are not necessarily directly related to their costs

To complete the circle, what third-party payers actually pay to

providers for these services is not necessarily equal to either

providers’ costs or charges.

45
4 6

COSTS TO THE HEALTH CARE FACILITY

The facility-related costs of ESWL can be

divided into three categories: 1) the fixed capital

cost of purchase and installation, 2) the costs of

operating the machine, and 3) other institutional

costs of caring for ESWL patients. These costs

vary depending on the extent of renovation or

construction necessary, the number of patients

served, and the type of facility (such as a freestanding ambulatory clinic or a hospital). They

will also vary, in the future, depending on which

ESWL device is used.

Capital Costs

The two major components of fixed capital

costs for ESWL are the cost of the machine itself

and the cost of the facility to house it. Because

the Dornier lithotripter is manufactured in West

Germany, its cost varies somewhat according to

the international exchange rate but has been approximately $1.7 million for the past year. The

cost of an ESWL facility is much more variable,

because it depends on the needs and goals of the

hospital or other organizations that own it. The

installation (construction and renovation) costs

of the first six hospitals in the United States to

acquire the device averaged $375, 000 and ranged

from $200,000 to $1,080,000 (3,11). In the latter

case the new facility included not only a room

to house the lithotripter but accommodations for

a vastly expanded patient load, physicians’ offices,

and a 50-seat auditorium (3,82).

The installation costs of future hospitals acquiring ESWL will depend on the extent to which

ESWL will expand (rather than replace) current

services. If renovation of existing cystoscopy

rooms and office space are sufficient, construction costs will be low. The American Hospital

Association estimates that most future hospitals

can adapt their facilities for ESWL at a cost of

about $250,000 (3). Dornier itself has estimated

that, when only renovation of existing surgical

space is necessary, installation can be performed

for as low as $100,000 (14). The Blue Cross and

Blue Shield Association chose to use a figure halfway between these two ($175,000) as its estimate

(14). Considering these and the previous figures,

it is reasonable to assume that the total fixed, capital cost of purchasing and installing a Dornier

lithotripter at present is around $2 million. A

lithotripsy center requiring substantial new construction, of course, would have higher costs.

Following standard practice, current estimates

assume a 5-year life of the present machine (14).

The Blue Cross and Blue Shield Association estimated interest expenses in 1985 at an additional

$219,000 per year (14) (see table 5).

The anticipated lower purchase and installment

costs of second-generation ESWL devices are a

major selling point for their manufacturers. An

important point to note is that some of these devices are expected to lower the installment costs

of ESWL because they do not require a separate

room, devoted to ESWL, to house the devices;

they can be used in established surgical suites. The

purchase costs are also expected to be lower than

for the Dornier device, although since only Medstone had installed one in a U.S. hospital as of

December 1985, the extent of savings is still uncertain. Medstone expects to price its device at

approximately $850,000 (31). Northgate plans to

price its device at approximately $400,000 (153).

EDAP’s lithotripter is tentatively priced at around

$500,000, depending on the exchange rate (2,49).

The effectiveness of these devices compared to the

Dornier lithotripter cannot be known until they

have been tested on a number of patients.

Operating Costs

Compared to fixed capital costs, the costs of

operating an ESWL device probably will change

somewhat less with the advent of the smaller devices. Typical costs of operating a lithotripter unit

include the costs of technical and nursing staff,

administration, insurance,2 supplies (such as Xray film, electrodes, and anesthesia), and the

maintenance contract for the machine. The cost

of a maintenance contract and the cost of the

‘In addition to the insurance that the owner of an ESWL device ,

and facility carries to protect itself, Domier requires that purchasers

of its lithotripter indemnify the manufacturer against any liabilities

not attributable to Dornier’s own negligence (81).
Table 5.—Two Estimates of Hypothetical Annual Facility Costs of the Dornier Lithotripter, 1985

Cost estimates

American Hospital Association Blue Cross and Blue Shield Association

Input 800 cases/year 1,000 cases/year 1,000 cases/year 1,500 cases/year 2,000 cases/year

Capital costs:

Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $120,000 $120,000 $219,000 $219,000 $219,000

Depreciation (equipment and facility) . . . . . . . . . . . . . . . . . . . 40,000 400,000 365,000 365,000 365,000

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 520,000 520,000 584,000 584,000 584,000

Capital cost per case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 650 520 584 389 292

Technical operating costs:

Salaries for additional full-time employees . . . . . . . . . . . . . . $131,000 $131,000 130,000 130,000 130,000

Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75,000 75,000 75,000 75,000 75,000

Office and building expenses . . . . . . . . . . . . . . . . . . . . . . . . . . 26,000 26,000 30,000 30,000 30,000

Lithotripter annual service contract . . . . . . . . . . . . . . . . . . . . . 188,500b

271 ,500b

1 17,500b 1 17,500b 1 17,500b

Electrode costs (est. $300/procedure) . . . . . . . . . . . . . . . . . . . 240,000 300,000 300,000 450,000 600,000

Medical supplies (est. $30/procedure) . . . . . . . . . . . . . . . . . . . 24,000 30,000 30,000 45,000 60,000

Collection feec 

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 192,000 240,000 — — —

Subtotal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 864,000 978,000 655,500 807,000 958,500

Technical operating cost per case . . . . . . . . . . . . . . . . . . . . 1,080 978 656 538 479

Total technical cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,384,000 $1,498,000 $1,239,500 $1,391,000 $1,542,500

Total technical cost per case . . . . . . . . . . . . . . . . . . . . . . . . . . 1,730 1,498 1,240 927 771

Ancillary and routine operating costs:

Ancillary services per case . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — 300 300 300

Routine inpatient services per case . . . . . . . . . . . . . . . . . . . . . — — 800 800 800

Total operating costs per patient . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,756 $1,638 $1,579

Total facility costs per patient. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,340 $2,027 $1,871

alncludes Salarfes arid benefits for additional nursing, technical, and admlnlstratwe personnel Does not Include Nwcian salaries or cha[~es

bAs of December 1985, Dornier,s quoted price for a maintenance contract was $87,0130 for the first year and $125,000 for each subsequent year, yleldlng an average of $11 7,500” Over 5 yeLlrS

C“Co//ection fees are assumed to be the gross revenue less uncollectible charges, multiplied by 10 percent, which amounts to $240 per case This IS the fee the hospital’s patient billlng department may impose

on a Ilthotripter treatment center that IS not Integrated with the hospital, such as a free-standing, outpatient treatment center” (3)

SOURCES H C. Alder, Lithotrlpters. Non/n vas/ve Dewces for the Treatment of K/dney Stones, AH A-012828 (American Hospital Association, Chicago, I L), 1985, Blue Cross and Blue Shield Assoclatlon, Extracorporeal Shock Wave L/thfripsy’ C/fnfca/ Assessment, Uti//zation and Cost Projections (Chicago, IL BC/BSA, May 1985)
4 8

energy source (the electrode, in the Dornier device) are the operating costs most likely to vary

among different ESWL models. For example, Dornier charges $200 per electrode for small orders

and $160 per electrode for large orders (2,000 or

more) (125). At present, ESWL requires approximately two electrodes per patient. In contrast,

Medstone plans to charge $750 per patient for

electrodes for the first 300 patients served by a

unit and assumes a use of one Medstone electrode

per patient. The price will decrease to $500 per

patient for the second 300 patients, $250 for the

third 300, and $100 for each patient after (31).

Other methods of generating the shock wave, or

longer lasting, inexpensive spark-gap electrodes,

might lower operating costs further.

Preliminary and follow-up lab tests, X-rays,

and routine hospital care (when the patient is hospitalized) are additional costs of caring for ESWL

patients. Adjunct procedures, such as placement

of a ureteral catheter, may also raise costs. Some

of these costs may change as experience with

ESWL technology increases, but they are not

likely to be greatly affected by alternative devices

currently under development unless those devices

differ significantly in effectiveness from the Dornier lithotripter and require a different level of patient care.

Effects of Patient Caseload

The most important aspect of the cost to the

facility of providing ESWL, other than the fact

that it is high, is that it declines dramatically as

caseload (the number of patients served) increases.

This characteristic of ESWL is largely due to the

high fixed costs of purchasing and installing a

lithotripter, costs faced by a hospital or other

lithotripsy facility regardless of how many patients are actually treated (although the costs

might be slightly higher if the initial planned

caseload was high). The consequence of this characteristic is that, at high volumes and constant

per-case revenues, providing ESWL can be a very

profitable venture3 as well as an advancement in

3

“In economic theory, profits are expected to be just high enough

to induce suppliers of a product to stay in the market to meet the

demand. In a perfectly competitive industry, where entry and exit

are entirely free and no artificial pricing policies are followed, profits

would tend to stay at the minimum level. Excess profits higher than

that level can occur when the producers of a service have some measure of monopolistic power” (181).

treatment alternatives and quality of care. Methodist Hospital of Indiana, for example, estimated

that during its first year of offering ESWL it realized a profit of $400 per case (92). This potential

profitability of ESWL makes it very attractive to

many hospitals and physician groups. Ironically,

if many facilities provide the technology, the

caseload of each facility will be low, and few may

actually realize those profits. Even so, a hospital

might choose to acquire an ESWL unit and accept little or no profit per case if, by doing so,

it could avoid losing patients to competing

providers.

Two independent estimates of the total facilityrelated costs of providing ESWL, for a hypothetical hospital-based ESWL facility, are summarized

in table 5. These hypothetical costs of an efficient

facility can be contrasted with the average reported operating costs of several hospitals with

ESWL units, as summarized in table 6. Clearly,

the actual operating costs of these latter hospitals were substantially higher, with most of the

difference in the routine and ancillary costs. A

substantial portion of these high ancillary costs

may be due to the requirements of the investigational protocol when ESWL was first introduced,

since the early ESWL centers were included in the

surveyed hospitals in table 6.

Table 6.—Average Per-Case ESWL Operating Costs of

Hospitals As Reported in Two Surveys, 1985

Prospective Payment Georgetown

Assessment Commissiona University b

Number of hospitals surveyed 7 16

Utilization:

Number of cases/year 1 ,200C

1,042

Number of ESWL shocks/case 1 ,100c1,594

Operating costs per case:

Technical costs . $ 667 $1,163

Room. ~ ~ 777 637

Other services . 1,268 1,320

Total . . . . . . . . . . . . . . . . . . . $2,712 $3,120

aFigureg used by the prospective Payment Assessment commission am Wtth

the exception of utilization assumptions, derived from costs reported by seven

of the first hospitals to estsbllsh ESWL units In the United States (19).

bFlgures used by Georgetown Unlvemlty are average repORSd costs Of treating

Medicare patients, from a survey of 16 hoapltals (131).

cLltilizationfigljre.g used by the Prospective Payment Asaassment tirnrnlsslon

are not actual fl~res reported by the hospitals, but rather are assumptions

derived from data provided by the American Urological Association and the

American Hospit@ Asaoclatlon(19) The fact that the Commission’s assumed

figures are higher than Georgetown’s actual utilization averages may account

for Georgetown’s higher technical costs, which are sensitive to caseload.

SOURCE: Prospective Payment Assessment Commission, f?epofl and Recorrrrnendatlons to the Secret~, U.S. Department of Hea/th and Human

Serv/ces (Wmhlngton, DC: U.S. Government Printing Off Ice, Apr. 1,

19ea).
49

To the extent that serving a very large caseload

requires additional construction and facilities, the

decline in per-case costs as patient load increases

that is demonstrated in table 6 may be overstated.

However, it is notable that even substantial increases in the estimated costs presented in this table have only a small effect on per-case costs. For

example, for a facility serving 1,500 patients per

year, actual annual costs that were $100,000

higher than the costs estimated by the Blue Cross

and Blue Shield Association (see table 5) would

increase per patient costs by only $67, from $2,027

to $2,094 .

That the first hospitals to provide ESWL are

probably all profiting from offering this service

is evident from comparing table 6 with table 7,

which lists the 1985 charges for ESWL treatment

(not including charges for physician, ancillary, or

inpatient care services) at each of the first six institutions to furnish it. There is no clear pattern

between caseloads and charges for these hospitals.

Ambulatory Centers

One strategy for lowering ESWL-associated facility costs, attractive to many current and potential ESWL providers, is to lower or eliminate

the patient care costs associated with a hospital

stay. From its introduction in the United States

Table 7.—Approximate Average Technical Charges

and Caseloads at the Six Longest-Operating

Extracorporeal Shock Wave Lithotripsy Sites

in the United States, May 1985

Estimated patients

Hospital Technical charge per year

Methodist Hospital

(Indianapolis, IN) $1,600 2,000-2,200

University of Virginia Hospital

(Charlottesville, VA) 2,800 1,800-2,000

Baylor Unwersity-Methodist

Hospital (Houston, TX) 3,000 1,300-1,500

University of Florida-Shands

Hospital (Jacksonville, FL) 3,000 900-1,100

New York Hospital-Cornell

Medical Center

(New York, NY) 3,600 1,100-1,300

Massachusetts General Hospital

(Boston, MA) 4,050 1,000-1,200

SOURCE Blue Cross and Blue Shield Association, Extracorporea/ Shock Wave

L/thotr/psy C/inica/ Assessment, Uti/izat/on and Cost Projections,

Chicago, IL, May 1985

until June 1985, ESWL was performed almost exclusively as a hospital inpatient procedure, in

which the patient w-as hospitalized the day before

the procedure and stayed in the hospital 2 or 3

days afterward for observation. Fewer than 3 percent of all treatments in the United States had been

performed on ambulatory patients (no overnight

hospital stay) as of May 1985 (11), and all existing ESWL units were in, or adjacent to, hospitals. In the future, ESWL could become an ambulatory procedure in a substantial number of

cases, although the comparative quality of care

when patients receive ESWL in this setting has not

yet been assessed.

An obstacle to routine ambulatory use of ESWL

is the need for patients to have rapid access to

emergency health facilities if complications arise

or intramuscular pain medication becomes necessary. In one of the first U.S. hospitals to offer

ESWL, for example, 6 of 31.5 ESWL patients were

treated as outpatients, but 2 of these were subsequently readmitted to the hospital for relief of pain

that did not respond to oral medication (11). If

a large number of patients must be treated i n

emergency rooms, or must be admitted to the hospital, the extent and cost savings of ambulatory

treatment may be far less than currently anticipated.

Nonetheless, three free-standing extracorporeal

lithotripsy facilities that intend to treat primarily ambulatory patients opened in 1985, and thus

far these facilities have succeeded in avoiding hospitalization for the great majority of their patients

(86). For example, the first of these, a free-standing facility in northern California that opened in

June 1985, treated 277 patients, ranging in age

from 14 to 77 years, between June 20, 1985 and

October 1, 1985. Twenty-five of these patients

(12.1 percent) were admitted to a hospital after

treatment (86). Patients at this facility are referred

by their urologists, visit the facility on the day

preceding treatment, and may either return home

or stay at a local hotel the evening after treatment

(68). The facility charges approximately $7,200

for a simple ESWL treatment, including the physician’s fees (68), and was treating about 20 patients per week after 2 months in operation (86).
5 0

IMPLICATIONS OF HIGH FIXED COSTS

The high fixed costs of ESWL have important

implications for its financial costs and benefits,

both when it is considered alone and when it is

compared with alternative technologies. If there

are many ESWL centers, each one will treat fewer

patients, have higher per-patient costs, and probably require more payer expenditures than would

otherwise be the case.

As large numbers of patients are treated at an

ESWL facility, costs decline for two reasons. First,

and most importantly, the capital costs of purchase and installation are spread across a larger

number of individuals. The effect of spreading

costs is evidenced in table 5, which demonstrates

that doubling caseload could reduce per-case technical costs for the procedure by as much as onethird. Second, the unit cost of electrodes for the

Dornier lithotripter-a significant component of

operating costs—declines if the electrodes are purchased in large volumes.

The direct association between volume of use

and per-case cost of ESWL has prompted a number of individuals and organizations to estimate

the number of ESWL centers that can or should

be established, given a large caseload (and thus

lower costs) at each center. As indicated in chapter 2, the number of patients with urinary stones

who might be treated with ESWL rather than surgery could be as low as a small proportion of the

65,000 patients per year who undergo surgery on

the upper urinary tract; it could be as high as the

roughly 874,000 patients per year who are diagnosed with some type of urinary stone. Estimates

of a number for whom ESWL might be reasonable and necessary range from 26,000 to 140,000,

all based on patients hospitalized with stones but

varying depending on the proportion of these for

whom ESWL is judged to be appropriate. Similarly, an appropriate caseload for an ESWL center has been assumed to be as low as 800 patients

treated per year (11,71) and as high as 2,000 patients (14). (The first figure is actually quite low,

and the latter is by no means a practical maximum; a few hospitals are already serving 2,000

or more patients per year. ) On the basis of these

estimated caseloads, the number of ESWL centers

required in the United States to treat patients who

would otherwise require invasive treatment has

been estimated at between 17 and 175 (11,155 ).4

These estimates are summarized in table 8.5

The importance of these estimates is not the actual quantities but their use as a baseline comparison and as an indication that the number of devices needed to serve the population with stones

requiring aggressive treatment is not large. The

estimates offer a stark contrast with the reality:

Dornier had delivered 50 lithotripters to hospitals in the United States by the end of 1985, and

the company plans to have a total of about 100

installed by the end of 1986 (125). The locations

of the ESWL units installed through December

‘The lowest estimate of ESWL units needed (17) was based on

an estimated 26,000 patients undergoing surgery for upper urinary

stones but used only 1,500 patients as an appropriate caseload. Applying a caseload of 2,000 patients per year, used in a separate estimate, to this number of eligible stones would yield a minimum of

13 ESWL units needed in the United States.

5

The American College of Physicians has recommended regionalization of ESWL but has not specified an “appropriate” number

of devices (s).

Table 8.—Estimates of Number of Extracorporeal

Shock Wave Lithotripters Required in the

United States

Estimated Iithotripters required

Low Middle High

U.S. Department of Health and Human

Services, ., ., – 100 –

American Hospital Association ... 28 – 48

American Urological Associationa (1) – 100 –

American Urological Association (2) 42 – 170

American Urological Association (3) 45 – 175

Blue Cross and Blue Shield

Association 28 50 93

Showstack. et al. . 17 – 106

aThe American Urological Association estimated the number of Iithotripters required under several different assumptions.

SOURCES: H,C. Alder, Mhotrlpfers: Norrlnvaslve Dev/ces for the ~reatrnent of

K/drrey Stones AHA4)12828 (American Hospital Association, Chicago,

IL, 1985); American Urologic Association, “Summary and Recommendations of the Ad Hoc Committee To Study the Safety and Clinical

Effectiveness of the Current Technology of 1) Percutaneous Lithotripsy, and 2) Non-Invasive Lithotripsy,” presented to the American

Urologic Association as a Preliminary Repoti, New Orleans, LA, May

9, 1985, unpublished mimeo; Blue Cross and Blue Shield Association, Extracorporea/ Shock Wave L/thotrlpsy: C/h’r/ca/ Assessment,

Utill.?atlon and Cost Pro/actions, May 1985; HHS News, statement by

Margaret M. Heckler, Secretary of Health and Human Services, Dec.

19, 1984; Showstack, J. A., Perez-stable E. J., and Sawltz, E., “Extracorporeal Shock Wave Lithotripsy: Clinical Application and Medicare

Physician Payment,” paper prepared for Office of Technology Assessment, Aug. 1, 1985.
57

1985 are given in table 9. A notable point from

this table is that while 26 States did not yet have

an ESWL unit by the end of 1985, 13 States already had more than one.

The decreases in per-case costs that accompany

increases in caseloads provide a strong incentive

for hospitals to attempt to increase the number

of patients using this treatment. If a large number of devices are purchased and their services

offered to patients, per-case costs to the ESWL

center will rise unless other stone patients, who

would not previously have been considered for

surgery, are treated. The high estimate of 874,000

newly diagnosed stones each year indicates how

large this potential market could be. ESWL centers

will have strong incentives to encourage physicians to prescribe ESWL treatment for patients

who formerly would have been treated medically.

Rather than being treated conservatively with pain

medication and fluids, patients with newly diagnosed stones and in acute pain may be scheduled

for immediate ESWL, regardless of the size of the

stone. Indeed, at least one hospital already offers

ESWL on this basis to some patients (82).

Table 9.— Dornier Lithotripters Installed in the United States as of December 1985

State City Purchaser State City Purchaser

Alabama Birmingham

Mobile

Arizona Phoenix

Arkansas Little Rock

California Burbank

Glendale

Long Beach

Los Angeles

Los Gates

San Francisco

San Jose

Tarzana

Florid a Fort Lauderdale

Orlando

Gainesville

Georgia Atlanta

Atlanta

Macon

Savannah

Illinois Chicago

Chicago

Peoria

Indiana Indianapolis

Iowa lowa City

Kentucky Louisville

Louisiana New Orleans

AMl-Brookwook Medical Center

Springhill Health Service

St, Joseph’s Hospital

St, Vincent Infirmiry

St Joseph Medical Center

Glendale Adventist Hospital

VHA– Memorial Medical Center

University of California

NME–Community Rehabilitation

Center

University of California

Los Gates Medical Center

AMI– Medical Center of Tarzana

North Broward Hospital

Florida Medical Plaza

University of Florida

Georgia Baptist Hospital

Emory University

HCA–Coliseum Park Hospital

Memorial Medical Center

University of Chicago

Rush Presbyterian/St. Luke’s

Hospital

St. Francis Medical Center

Methodist Hospital

University of Iowa

Humana–Suburban Hospital

VHA–Ochsner Foundation

Hospital

New Orleans

Massachusetts Boston

Burlington

Michigan Ann Arbor

Detroit

Minnesota Minneapolis

Rochester

Missouri St. Louis

New Jersey Marlton

New York New York

North Carolina Winston-Salem

Winston-Salem

Durham

Ohio Cinncinati

Cleveland

Columbus

Toledo

Pennsylvania Philadelphia

Tennessee Knoxville

Nashville

Texas Dallas

Houston

Virginia Charlottesville

Washington. Seattl e

Tulane Universlty

Massachusetts General Hospital

Lahey Clinic

Universlty of Michigan

VHA– Henry Ford Hospital

University of Minnesota

Mayo Clinic

Barnes Hospital

Garden State Community Center

Cornell University/New York

Hospital

North Carolina Baptist Hospital

Hawthorn Medical Mall

Duke University

Bethesda Oak Hospital

Calicilex Corporation

Ohio Kidney Stone Management

Genito Urinary Surgeons

Unwersity of Pennsylvania

HCA– Park West Hospital

VHA–Baptist Hospital

Presbyterian Hospital

The Methodist Hospital, Texas

Medical Center

Virginia Kidney Stone

Foundation

Mason Clinic

TOTAL: 50 units

Acronyms AMI—American Medical International

HCA—Hospital Corporation of America

NME—National Medical Enterprises

VHA—Voluntary Hospitals of America

SOURCE’ E Polzer, Dornier Medical Systems, Marietta, GA, personal communication, October 1985
5 2 —

COSTS AND ECONOMICS OF PHYSICIAN SERVICES

Physicians have both direct and indirect effects

on the cost of ESWL to facilities and the payments

for ESWL by patients and third-party payers.

Physicians make the actual decision to refer or

not to refer patients for ESWL, and thus they control the number of patients treated at each facility, which in turn affects both per-treatment and

total costs. Because financial factors can influence

physicians’ decisions, the relative cost to physicians of performing alternative treatments has significant implications for the use of, and total costs

for, ESWL. Financial incentives to treat patients

with ESWL are especially powerful when the physician is a part owner of the ESWL center. And,

finally, to the extent that payers attempt to adjust payments to costs, physicians’ costs affect expenditures directly.

Physicians, with the exception of some hospitalbased physicians, have traditionally billed for

their professional services separately from the

services provided by the health care facility. The

actual costs of providing services are exceedingly

difficult to define. Not only are the relative

amounts of various inputs (surgical time, advisory time, administrative time, office overhead,

etc. ) difficult to determine, but the value of those

inputs, and their relationship to physicians’

charges, is an unending subject of debate.

At least three types of physicians may be involved in a lithotripsy case. The physician in

charge of the patient is most likely to be a urologist, trained in the diagnosis, removal, and other

treatment of urinary stones. Urologists currently

perform most surgical stone removals and most

percutaneous removals and transurethral manipulations. An anesthesiologist and a radiologist may

also be involved in performing ESWL, although

a nurse-anesthetist may provide anesthesiology

services, and the radiologist’s role may be largely

confined to preprocedure diagnosis of the stone

and radiological follow-up.

Whether physicians other than urologists

should be in charge of some ESWL cases is a matter of debate. Nephrology, for example, is a subspecialty of internal medicine centering on disorders of the kidney. However, nephrologists

have traditionally not performed surgical treatment of kidney stones, and there is resistance on

the part of many urologists to permitting nephrologists to perform ESWL. In the short run, at least,

it is unlikely that physicians other than urologists

will be in charge of the ESWL procedure itself. b

The fact that only urologists are likely to be

performing ESWL in the near future has implications for the costs of the procedure both to those

who perform it and to those who pay for it. The

cost to a urologist of performing ESWL can be

thought of as the opportunity cost of not spending time in alternative ways, such as in performing open surgery or percutaneous lithotripsy. If

ESWL takes time, training, and skill comparable

to these alternatives, then its costs are comparable. At present, there are no data on these factors, although the little evidence available indicates that ESWL takes less time—usually an hour

or less (137), compared to reported percutaneous

or open surgery times averaging 2 hours or more

(129). To the extent that a urologist can perform

ESWL more quickly than alternative procedures,

the costs of ESWL to the urologist are lower.

The time it takes physicians to perform ESWL

(and, hence, their costs) are, like facility costs,

sensitive to the volume of services provided. Physicians will not only increase their efficiency as

they perform more procedures after learning the

technique, but they are likely to continue to perform it both quickly and effectively if they perform it often.

Other professional costs associated with ESWL,

such as patient evaluation and follow-up services,

should be roughly comparable to those required

for alternative procedures. These costs may even

become lower over time, since ESWL should require fewer follow-up hospital visits by the physician due to the shorter hospitalization that ESWL

requires. It has been noted that ESWL currently

bl%e American Urological Association has recommended that only

individuals “. . . who have expertise in surgical and endoscopic skills

equivalent to those certified by the American Board of Urology;

or, Urology residents in training . .“ operate a lithotripter (11).

Since all training is currently done by ESWL-experienced urologists,

nonurologists are unlikely to be permitted to train in ESWL in the

near future.
requires extensive patient-physician discussions

that include informing the patient about the new

technology and evaluating which patients are

more suitable for a technique that is still novel.

Over time, however, these costs should more

closely approximate the routine evaluation necessary for any major treatment alternative.

Despite the fact that actual costs of ESWL to

physicians performing it are probably lower than

the costs of performing alternative procedures,

and will probably decrease further, many urologists argue that charges for ESWL should be comparable to those for the surgical alternatives. Bases

for this argument are, first, that ESWL requires

substantial additional training on the part of the

physician, and second, that ESWL replaces surgical procedures and should be charged a comparable price. These arguments carry the highest

weight in the short run, when learning and evaluation costs are relatively high. However, as discussed in the next chapter on payment, price may

not decline even after costs have done so. This

problem makes the quantification of physician

costs important to payers who wish to adjust relative payments to relative costs.

Box A presents a possible model for quantifying the costs to a urologist of performing ESWL.

The model is based on opportunity costs to the

physician, of which time is the most important.

This example uses a surgical income (including

benefits) of $218,750 per year as the basis for the

53

value of time to a urologist. This income can be

thought of as either the gross (before tax) income,

after deducting office expenses, of a self-employed

urologist, or as the gross income of a salaried urologist.7 A crucial assumption of the model is that

the physician values all time equally. If the time

spent on services associated with ESWL is valued

more highly than other time, or if the physician

spends more time in preparation and evaluation

than is allowed in the model, the model may undervalue the costs associated with ESWL patients.

The surgical income base, however, may overvalue costs if there is a protechnology bias in the

present reimbursement system (155). A lower income base would result in lower costs, since it represents a lower value for time.

Although this model relies on broad general assumptions that undoubtedly do not hold true in

many cases, it does offer a basis for discussion

for future estimates of the cost of performing

ESWL-related services over time and for comparative costs among alternative technologies. Note

that the model does not include the anesthetist’s

component of the total professional fee.

7

This number appears to be a reasonable but somewhat high approximation of gross personal income. An ongoing, self-reported

survey conducted by Medical Economics found that average gross

practice earnings for urologists in 1984 were $221,230 (116). The

median professional expenses for this group were $78,060 (117),

yielding gross personal earnings of roughly 143,170. Note that with

lower earnings, the opportunity cost of spending time performing

ESWL is also lower.

COMPARING COSTS OF ALTERNATIVE TECHNOLOGIES

Data in the existing literature do not permit

direct comparisons of the costs of alternative

technologies for treating upper urinary stones.

Charges, however, have been compared across

technologies at several institutions, with results

that are occasionally surprising. Table 10, for example, presents charges for stone removal at two

institutions. These institutions are in different

States, and interinstitutional comparisons of

charges may not be entirely appropriate, but the

within-institution comparisons permit some interesting insights. At the institution that performs

both ESWL and percutaneous lithotripsy, total

professional charges for simple ESWL are substantially less than for simple percutaneous nephrolithotomy. This difference results not from lower

fees by the urologist, but from the lower anesthesiology fees and the lack of need for a radiologist. However, ESWL savings disappear when

more than one treatment or additional stone manipulation is needed; total professional fees are

higher for complicated ESWL cases than for open

kidney surgery for stones at this institution (11).

Researchers at a second institution compared

charges for three different methods of perform-
54

Box A.—A Model of Physician Opportunity Costs of Peforming ESWL1

Description of

One way to estimate physician costs of performing

ESWL is to calculate the opportunity costs to the physician of performing the procedure. It is perhaps easiest to

understand this model if one thinks of a prepaid group

practice calculating the number of procedures, including

pre- and post-procedure visits, that could be completed

by a urologist who is hired full time to perform ESWL.

It is assumed in this model that a physician provides

patient care 35 hours per week for 46 weeks per year,

totaling 1,610 patient care hours per year. This model

includes both uncomplicated and complicated cases. A

prototypical uncomplicated case might include:

one prehospital office visit that includes a patient history and physical exam,

a hospital visit,

the procedure itself,

two subsequent hospital visits after the procedure,

and

two office visits after hospital discharge.

The prototypical complicated case includes three additional visits in the hospital and two additional ambulatory visits as well as the visits and procedure outlined

for the uncomplicated case.

The total amount of professional time calculated in this

model to take care of an uncomplicated case is 5.0 hours;

a complicated case is calculated to require 7.5 hours. The

the Model

estimates of time include routine tasks, such as writing

notes and taking phone calls. It is estimated that if all

- are uncomplicated, approximately 322 procedures

per year could be performed by a urologist. If all cases

were complicated, approximately 215 procedures per year

could be performed.

The model assumes that the cost to the group practice

of hiring a full time urologist to perform procedures is

$175,000 per year salary, P1us $43,750 in fringe benefits,

for a total cost of $218,750.2 Dividing this by the number of procedures per year implies that the actual opportunity cost to a urologist of performing ESWL full time,

rather than spending it on other activities, is approximately $679 for an uncomplicated case and $1,017 for

a complicated case. If most cases are uncomplicated, the

typical cost per case might be approximately $800–

approximately one-half the fee that a group practice

would have to pay if a urologist were paid the same rate

as urologists currently charge for open stone surgery (see

table 10).

The model also assumes that a referring physician

would transfer total responsibility for the patient or would

perform the procedure and followup visits him/herself. Malpractice insurance fees are assumed not to change

as a result of substituting ESWL for other services and

are therefore omitted from the model. The fees of an

anesthesiologist are also omitted from the calculation.

The Calculation

Annual opportunity costs:

$175,000 presumed annual wages for a salaried urologist

43,750 fringe benefits (25 percent of salary)

$218,750 total income expected from alternative activities

Total time available: 35 hours/week X 46 weeks/year = 1,610 hours per year (assumes 5+ hours/week for

continuing education, etc.; 6 weeks vacation per year)

Potential time devoted to ESWL and related activities:

Uncomplicated case Complicated case

Prehospital history and physical exam. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 hour 1.0 hour

Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 hours 1.5 hours

Hospital visits (0.5 hr. each) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.5 hours 3.0 hours

Posthospital visits (OS hr. each) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.0 hours 2.0 hours

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.0 hours 7.5 hours

Cost per ESWL case:

Uncomplicated case: 1,610 hours/5.0 hours per case = 322 cases; $218,750/322 cases = $679 per case

Complicated case: 1,610 hours/7.5 hours per case = 215 cases; $218,750/215 cases == $1,017 per case

*Adapted from J,A. Showwtack, E.J. Perez-Stable, and E. Sawitz, ‘Zxtracorporeal Shock Wave Lithotripay: Clinical Application and Medicare Physician Payment,” paper prepared for the Office of Technology Aasewnmt, Washington, IX, Aug. 1, 19S5.

*In 1979, the most recent year for which American Medical Association data for urolosiats’ earr@s are available, the median net incomes for urologists in soIo practice were S93,S30 (for thoae in solo practke) and $99,060 (for those in P=t=d@s) (7). The median net income for fymeral sqeons

in solo practice in this year was $96,0LXI. Based on the reported rate of rise in general aurgeons’ incomes through 19S2, the approximate median net

income of a general surgeon in 19SS was $175,000; thus, this figure was used as an approximation of a urologiat’fi median net income in 19S5 (136).
. .

Table 10.—Examples of Average Hospital Charges for Alternative Methods of Removing Upper Urinary Stones

Hospital charges Professional charges

Technical

(operating and Room and Ancillary services

Treatment recovery room) routine care and supplies Other Total Urologist Anesthesiologist Radiologist Total Total charges

Methodist Hospital, Indianapolis:

Simple one-treatment ESWL

Complicated ESWL (more than one treatment or

additional manipulation)

Simple nonstaghorn percutaneous

nephrolithotomy

Percutaneous nephrolithotomy for staghorn stone

(may Include ESWL in addition)

Anatrophic nephrolithotomy (open surgery for

stones not treatable with other methods)

University of Texas Health Science Center, Dallas:

(no ESWL unit)

Outpatient percutaneous nephrolithotomy

One-stage percutaneous nephrolithotomy

Two-stage Immediate percutaneous nephrolithotomy

Two-stage delayed percutaneous nephrollthotomy

Open survey

$1,741 $ 951 $ 955 $184 $3,831 $1,51 5 $352

3,006 1,623 1,626 307 6,562 2,179 822

2,148 1,488 1,334 53 5,023 1,597 650

4,756 2,599 2,615 231 10,201 2,848 900

3,122 3,131 3399 120 9,772 1,812 950

$ 0 $1,867

0 3,001

500 2,747

500 4,248

0 2,762

2,095

2,030

2,586

2,169

2,370 “.

$ 5.698

9,563

7,770

4,449

2,534

3,349

4,389

7,534

4,490

6,552

SOURCES American Urologlc Assoc!atlon, Report of American Uro/ogma/ Assoc~at/on Ad Hoc Comm/ttee To Study the Safety and C//n/ca/ Effectiveness of the Current Technology of Percutaneous Llthotrlpsy,

and fVon-/rr~as/~e Llthofrlpsy (Baltimore, M D: AUA, May 16, 1985); G M Preml nger, R V Clayman, T Cu rry, et al “Outpatient Percutaneous Nephrostol Ithotomy, ’”

J Uro/ 133(4 )”316A, Apr!l 1985 (part 2), G M Premlnger, R V Clayman, and S W Hardeman,

unpublished paper abstracted in

“Percutaneous Nephrostollthotomy vs Open Surgery for Renal Calculi, ” J A M A 254(8) 1054-1058, Aug

23/30, 1985
56

ing percutaneous nephrolithotomy with open surgery on patients with equivalent stones (130).

They found that professional charges for percutaneous procedures were slightly less than for

open surgery except when percutaneous nephrolithotomy was performed as a two-stage immediate procedure (see ch. 3). Professional charges

at this institution and the one also providing

ESWL cannot be compared precisely, because the

patients may not have been equivalent across institutions. It is notable, however, that total professional fees for simple ESWL at the one institution

are lower than professional fees for any percutaneous or open surgery performed at the institution

without ESWL.

To the extent that relative charges do reflect

relative costs to the hospital, the hospital average charges from Methodist Hospital in Indianapolis, summarized in table 10, indicate that

simple ESWL treatment is less expensive to that

hospital than percutaneous or open surgery. However, if additional ESWL treatments or stone

manipulation is needed, the cost savings of ESWL

to the lithotripsy center may be lost.

The above discussion suggests that patients with

stones that can be treated with a single ESWL procedure may have lower total charges (facility plus

professional) than if they underwent either percutaneous or open surgery. But some percutaneous nephrolithotomy patients at the University

of Texas hospital have lower charges than patients

undergoing simple ESWL at the Indianapolis hospital, Since the patients and the charges at these

two institutions are not directly comparable, no

firm conclusion can be drawn regarding these two

technologies. Nor is it clear which alternative is

less expensive in total for complicated stones,

since such stones may require more than one

ESWL procedure or a more protracted percutaneous procedure (or the two in combination). The

DISABILITY COSTS

The short disability time away from normal

activity that is associated with ESWL treatment

is a significant advance over that accompanying

open surgery, and it is probably shorter, on averone clear conclusion that can be drawn is that

open surgery is usually more expensive than less

invasive technologies, and for simple stones its

use is difficult to justify when alternatives are

available. The relative cost advantages of ESWL

over other technologies, of course, depend on the

extent of use of the facility and, thus, the per-case

costs of ESWL treatment.

A factor that should increase the cost advantage of ESWL over other technologies is the significant movement toward ambulatory ESWL, as

evidenced by the three free-standing centers treating most of their patients on this basis (86). When

overnight stays are eliminated, the cost of ESWL

and related services may decrease by several hundred dollars per patient. These differences may

be more apparent in hospitals offering both inpatient and outpatient ESWL than between hospitals and free-standing ESWL centers. Charges

for ambulatory treatment at free-standing centers

are not necessarily lower than charges for inpatient ESWL, perhaps due to higher construction costs for free-standing centers than for

hospital-based units. For example, the free-standing center in California charges significantly more

for ambulatory ESWL patients than the Methodist Hospital of Indianapolis does for ESWL inpatients ($7,200 vs. $5,698, physician charges included).

Percutaneous lithotripsy has now been performed on a few ambulatory patients with small

stones (130). To the extent that percutaneous

lithotripsy and ESWL can both be performed on

ambulatory patients or on patients with very short

hospital stays, the facility-based part of their costs

may be similar. At present it appears that the applications of ambulatory percutaneous lithotripsy

are much more limited than those of ambulatory

ESWL.

age, than the disability time associated with percutaneous lithotripsy. As of mid-1985, ESWL usually required patients to undergo 3 to 4 days of

hospitalization associated with the treatment in
5 7

most centers and under a week more of recuperation at home (3,11,137). Total disability time,

including hospitalization and recuperation, as

short as 7 days was reported even during the investigational phase of ESWL (187). The trend

toward ambulatory ESWL implies that such experiences may now be closer to the norm than the

exception. By comparison, a recent study in one

hospital found that patients with simple small

stones receiving percutaneous lithotripsy were

hospitalized for an average of 4 days and returned

to work an average of 6 days after hospital discharge, for a total disability time of 10 days. Similar patients undergoing open surgery for stones

were hospitalized an average of 10 days and did

not return to work for an average of 24 days after discharge (129).

It has been suggested that the advantages of

ESWL are particularly great for persons in certain occupations in which the very presence of a

urinary stone precludes normal work (115). Military pilots, for example, are not permitted to fly

if they harbor stones, even asymptomatic ones,

and some pilots have been known to request stone

surgery in order to be able to pass future flight

physical examinations (84,115). Thus, workers

and employers (in this example, the Defense Department) may recognize substantial savings from

ESWL over open surgery, and probably over percutaneous lithotripsy as well if current trends

toward ambulatory ESWL continue.

Because disability time is very costly to both

patients and employers, it may be a significant

factor in determining patient demand for a particular treatment technology. Anecdotal evidence

suggests that the short recuperation time associated with ESWL, the avoidance of an incision, and

the expectation of less associated pain combine

to encourage patients to choose ESWL over more

invasive treatments when a choice is offered (28),
Chapter 6

ESWL and Federal

Payment Policies
Chapter 6

ESWL and Federal Payment Policies

INTRODUCTION

Third-party payment for health care services

exerts a critical influence on the development,

adoption, and use of medical technologies. Decisions to pay for the use of particular new technologies are explicit statements that those technologies are no longer considered investigational;

decisions to cease paying for old ones are statements about the appropriateness of their use given

the current state of the art. In turn, the method

of payment for the use of technologies and the

level of payment allowed can have a substantial

impact, both on decisions by health care providers

to acquire and use new technologies and on decisions by manufacturers to develop them.

Payment for medical technologies is more than

a financial acknowledgment of services rendered.

Because payment influences use, payment policies

are a tool that can be used by government and

private sector third-party payers alike in an attempt to influence use and encourage appropriate decisions about how to treat any given condition. The fact that payment policies do not

always have these effects by no means diminishes

the importance of this tool, Unintended and unavoidable consequences of a payment policy, as

well as intended effects, affect the speed and extent of technology diffusion throughout the health

care system and the way in which a technology

is used.

The potential to treat many urinary stones less

expensively with extracorporeal shock wave

lithotripsy (ESWL) than with alternative technologies, despite the substantial price of ESWL equipment, makes this technology an easily identified

target for payment policies that encourage providers to supply an adequate, but not excessive,

amount of the service. In this chapter, it will become evident that payers have found this objective a particularly difficult one to reach. Payment

for ESWL is strongly influenced by the fact that

ESWL may be substituted for more expensive surgical procedures. There is strong pressure by

providers to have those paying for ESWL do so

at the same level as these more highly priced alternatives. From the payers’ perspective, generous

payment levels can encourage rapid diffusion of

an innovative technology but are unlikely to control health care expenditures. Even more critically,

high payment for ESWL may encourage overpurchase. Since the per-case technical cost of ESWL

is so sensitive to the number of patients treated, ]

overpurchase would drive up the cost to ESWL

centers of providing the technology,

Private and public sector payers alike moved

quickly to include ESWL as a covered benefit once

it was approved by the Food and Drug Administration (FDA) for marketing. The first plan to

cover ESWL was Blue Cross/Blue Shield of Massachusetts, which initiated coverage only a few

months after the procedure was first offered, in

its investigational phase, at Massachussets General Hospital in Boston. Rather than waiting for

the formal announcement by FDA that the Dornier lithotripter was approved for marketing, Blue

Cross/Blue Shield of Massachusetts based its decision in part on the FDA’s Advisory Panel on

Urological Devices’ recommendation for approval,

which was announced at the end of May 1984.

The insurance plan began covering the procedure

in June 1984. At least one other Blue Cross/Blue

Shield plan began covering ESWL before FDA approval was officially announced as well (155).

This chapter describes Medicare payment policies, how they apply to ESWL, and how they

may influence the adoption and use of this technology. Since Medicare is both a significant proportion of the medical care market and a model

for other purchasers, its influences can be pervasive. Hospital payment policies affect purchase

and availability of ESWL equipment; payment for

‘Strictly speaking, the cost of an ESWL procedure declines ~’ith

the number of procedures, not the number of patients (since a patient may have more than one procedure). However, relatively few

patients undergo multiple ESWL procedures in one hospital stay,

so the generalization that per-case costs decline as the number of

patients increases is also true.

61
6 2

ambulatory services influence the site of care as

well as the decision to purchase; and physician

payment policies can influence physicians’ willingness to perform the procedure.

Three other Federal organizations provide or

purchase health care for a significant number of

Americans: the Veterans Administration (VA),

MEDICARE

Medicare payment policies affect the cost, distribution, and use of ESWL in four ways: through

the decision to cover (or not cover) the technology, through the payment method, through the

payment level, and through the fact that Medicare policies are a potential model for other

payers. Hospital, ambulatory facility, and physician payment policies all may influence ESWL.

ESWL has important implications for Medicare,

because it may often be the preferred treatment

for some patients who are particularly likely to

be covered by Medicare. Many elderly patients

who form stones may have had previous operations for stones. Additional surgery could endanger their kidneys, and they are often at higher

risk of complications from surgery than younger

stone patients. Also, many disabled spinal cord

injury patients are covered by Medicare. This

population tends to form urinary stones repeatedly, and ESWL may prevent the need for multiple surgeries that could damage the kidneys. A

final implication of ESWL for Medicare is that to

the extent that ESWL can prevent kidney destruction through neglected stones or repeated operations, this technology can reduce the size of the

population with end-stage renal disease, whose

treatment is covered by Medicare. The latter benefit assumes, of course, that no damage from

ESWL itself will develop over time.

Coverage Decisions

Medicare, enacted as a Social Security benefit

in 1965, now provides medical care coverage for

over 30 million aged and disabled persons (190).

The Medicare program is prohibited by law from

paying for medical services that are not “reasonthe Department of Defense (DOD), and the Indian Health Service (IHS). The services provided

or purchased by these organizations may also

have a significant cumulative effect on the market for ESWL. This chapter concludes by reviewing the policies of these organizations for purchasing ESWL devices or services.

able and necessary” (Public Law 89-97). This clause

has been interpreted by the Health Care Financing Administration (HCFA) as precluding payment for experimental technologies. Decisions

regarding when a new technology ceases to be experimental are largely left up to local intermediaries and carriers, the entities under contract to

HCFA to make payments to beneficiaries on

Medicare’s behalf for hospital (Part A) and physician (Part B) services, respectively (178). These

decisions can vary considerably across regions.

One carrier may determine that a particular technology is safe and effective, for example, while

another considers it still investigational and will

not reimburse physicians for its use.

If payment for the use of a particular technology is sufficiently problematic, HCFA may request that the Public Health Service’s Office of

Health Technology Assessment (OHTA)2 assess the

status of the technology and make a coverage

recommendation to HCFA. HCFA, in turn, will

make a coverage decision based on that assessment and inform the carriers and intermediaries

of the decision. Until recently, cost criteria were

not included as factors in assessments for Medicare coverage decisions, and expensive technologies were eligible for coverage without regard

to cost effectiveness (178). However, Public Law

98-551 expanded OHTA’S medical technology

assessment criteria to allow examination of cost

effectiveness and medical appropriateness issues

as well (181).

2

0HTA has no organizational affiliation with the Congressional

Office of Technology Assessment. OHTA evaluates medical technologies for the Health Care Financing Administration for the purpose of making coverage decisions under Medicare and Medicaid.
63

HCFA’s criteria for determining whether a technology is experimental for purposes of Medicare

reimbursement differs in an important way from

FDA’s criteria for determining whether a technology should receive premarket approval. FDA considers a medical device to be safe and effective

when, on the basis of valid scientific evidence, the

device is shown to be safe and to have the effect

claimed by the manufacturers under the manufacturer’s specified conditions of use (2 I U.S.C.

260). On the other hand, HCFA’S criteria include

consideration of the state of development of the

technology, the degree of acceptance of the technology in the medical community, and the likelihood that the technology will produce a health

benefit (176). Thus, a technology may be approved by FDA for marketing purposes but not

covered by HCFA for payment (178).

In the case of ESWL, cost considerations probably helped to prompt the Secretary of the Department of Health and Human Services’ request

for an expedited coverage review of this technology (186), HCFA announced in May 1985 that

Medicare would cover ESWL beginning with any

treatments administered on or after March 15,

1985 (12), only 3 months after FDA approved the

Dornier lithotripter for marketing and 11 months

after the first ESWL device was installed in the

United States. In contrast, HCFA first approved

coverage of computed tomography (CT) scanning, an expensive diagnostic technology, 39

months after the first U.S. scanner was installed

(169). Magnetic resonance imaging (MRI), a complex as well as a costly diagnostic technology, did

not receive formal coverage under Medicare until November 1985 (191 ), nearly 60 months after

MRI first appeared in the United States (169).

These technologies are not directly comparable

to ESWL, since they are diagnostic rather than

therapeutic technologies and have a more complex set of potential uses. Still, the contrast demonstrates that ESWL underwent a relatively quick

and efficient coverage process. The primary difficulty that ESWL presented to Medicare coverage concerned not the medical abilities of this technology but ESWL’s classification for payment

purposes, discussed in the next section.

Hospital Payment

Classification of ESWL

Services received by a Medicare beneficiary as

a hospital inpatient are covered under Medicare

Part A and paid through Medicare’s prospective

payment system (PPS). Under PPS, hospitals are

reimbursed at a pre-set rate for each Medicare patient they admit for diagnosis or treatment. Capital costs (depreciation, interest, and return-onequity to for-profit institutions) and costs associated with medical education are not included in

the rates,3 and PPS does not presently apply to

Part B services, such as physician visits and hospital outpatient services.

The payment rate itself depends in most cases

on four elements:

1. the patient’s principal diagnosis,

2. the principal procedure performed on that

patient,

3. the patient’s age, and

4. the presence or absence of any medical complications or coexisting diseases.

Based on these elements, each hospital patient is

assigned to a diagnosis-related group (DRG). A

person with a principal diagnosis of urinary stones

who required treatment might be classified into

any of six DRGs, as listed in table 11. The payment received by the hospital for treating that

patient depends on the weight4 of that patient’s

DRG; weights are greater (and payment higher)

if the patient is over 69 years of age, has coexisting conditions needing treatment, or undergoes

a surgical rather than a medical procedure.

A major dilemma that surrounded Medicare

coverage of ESWL for hospital payment purposes

concerned how the use of this technology should

be coded under the International Classification of

‘As of December 1985.

4DRG weights are based on the relative operating costs of treatment for the average patient within each DRG. A patient in a DRG

with a weight of 2.0, for instance, is assumed tc~ require on average

four times the resources of a patient in a DRG with a weight of O S.

Corresponding to these weights, Medicare DRG reimbursement to

the hospital for the first patient would be roughly four times as high

as reimbursement for the second. Actual payments depend at present

on actual hospital costs and other factors,
64

Table 11.– Diagnosis-Related Groups Used as Basis for Medicare Payment for Urinary Stone Treatment, 1986

Arithmetic mean length of

Diagnosis-related group Weight a

stay (days)b

304 (surgical) major urinary procedures, age 70 or older or with comorbidities and complications 20323 13,5

305 (surgical) major urinary procedures, under age 70 without comorbiditles and complications 1.4894 10.4

310 (surgical) transurethral procedures, age 70 or older or with comorbidities and complications .. 0,7266 5.6

311 (surgical) transurethral procedures, under age 70 without comorbidities and complications 0.5563 4.1

323 (medical) urinary stones, age 70 or older or with comorbidities and complications .05863 5 1

324 (medical) urinary stones, under age 70 without comorbidities and complications 04098 3.6 —. —-

a

The weight assigned a DRG IS assumed to represent the relative costliness of resources used for patients in that DRG Payment for a DRG with a weight of 2 IS approxi.

—

mately four times that for a DRG with a weight of O 5

bThe average length of hospital stay for patients in that DRG

SOURCE 50 FR 35646

Diseases, Ninth Revision Clinical Modification

(ICD-9-CM), described in appendix C. Each diagnosis and each procedure has a corresponding—

code that is used to represent that diagnosis or

procedure on the hosiptal’s patient discharge

sheet. These codes in turn are used by the DRG

Grouper–the computer program used by Medicare intermediaries (and many hospitals) to assign DRGs—to determine which DRG is the applicable one for that patient.

The problem of classifying ESWL for hospital

payment purposes involves not the diagnostic

codes but the procedural ones. Since ESWL is a

new technology, there is no ICD-9-CM procedure

code specifically intended to correspond to its use.

Surgical removal was the usual nonmedical treatment for urinary stones when the coding system

was last revised, The only code that specifies stone

fragmentation is the code for ultrasonic lithotripsy

(59.95), which is usually reported together with

a second code that represents the endoscopic procedure for which ultrasonic lithotripsy is used (see

app. C). ESWL has been temporarily assigned this

ultrasonic lithotripsy code (50 FR 24374). When

used alone, without an accompanying code for

an invasive procedure (as is the case for simple

ESWL treatment), this code causes ESWL to be

classified for PPS purposes as medical treatment

(126).

Level of Payment for ESWL

Because ESWL is classified as “medical” rather

than “surgical,” the procedure is reimbursed at a

level that is only about one-third of that for surgery or percutaneous lithotripsy, the main alternatives (see table 11). This occurs because the

weights assigned to DRGs 304 and 305 for surgical treatment of kidney stones—and thus the payment to the hospital for those DRGs—are triple

the weights for medical treatment. Since treatment

by ESWL alone places a patient in one of these

medical DRGs (323 or 324), use of it without an

adjunct procedure brings the hospital roughly onethird the payment that it would were the procedure assigned into DRGs 304 or 305.

5

Under PPS, the incentive or disincentive for

hospitals to encourage physicians to prescribe

ESWL depends not only on how much ESWL is

reimbursed relative to invasive procedures but

also on how its per-case operating costs compare

to the DRG payment to the hospital. From the

point of view of operating costs, ESWL will be

favored by hospitals if the surplus of DRG payment over costs is larger (or the deficit smaller)

than the difference between payment and cost for

alternative procedures, regardless of the DRG in

which the alternatives are classified. Since different hospitals will have different costs for each

alternative, including ESWL, the direction and size

of financial incentives will vary as well.

As an example of how a hospital might fare

when providing ESWL to Medicare patients, one

can calculate a very rough average payment rate

for DRG 323. If the phase-in period for PPS had

been complete, and a hospital’s DRG payment

had not been partially dependent on that hospital’s actual costs, the 1984 Federal standardized

5

The creation of a new ICD-9-CM code and a new DRG for ESWL

has been suggested as a long-run solution to this classification problem (50 FR 24374).
65

DRG payment (exclusive of regional adjustments

for wage rates, etc. ) for operating costs in DRG

323 would have ranged from approximately $1,400

in rural regions to approximately $1,775 in urban

ones. ’ DRG 324 has a lower weight than DRG

323 and correspondingly pays a lower amount (in

this simplified calculation, $979 to $1,227, depending on hospital location). Based on these

figures, it would appear that as long as ESWL is

classified as a medical procedure under PPS, and

the weights of DRGs 323 and 324 remain unchanged, some efficient urban hospitals—those

with low per-case ESWL costs and minimal ancillary costs and lengths of stay for uncomplicated

patients—may be able to perform the procedure

within the payment rate even when PPS is fully

implemented. For example, the hypothetical hospital in table 5 treating 1,500 patient per year

would have average per-case operating costs of

$1,638 for patients with 4-day stays, However,

these assumed Federal DRG rates are approximate, and even some efficient hospitals might

have losses.

The Prospective Payment Assessment Commission (ProPAC), which offers recommendations to

HCFA regarding PPS, examined actual average

1984 DRG payments for ESWL in seven hospitals (131). ProPAC found average payments of

$2,655 for DRG 323 and average payments of

$1,857 for DRG 324. Based on reported average

costs of these hospitals (see table 5, ch. 5),

ProPAC estimated that the DRG payments covered these hospitals’ costs 98 percent of the time

in DRG 323, but only 68 percent of the time in

DRG 324. The Commission compared its estimates with information from a survey of 16 hospitals with ESWL centers. These hospitals received

average payments $2,557 for DRG 322 and $1,787

for DRG 324 (40). This preliminary analysis led

“For simplicity’s sake, these figures are calculated in 1984 dollars,

and with 1986 DRG weights, but as if the prospective payment system’s phase-in period were complete; they do not represent actual

payments to any hospital. They also ignore area wage-related and

other adjustments, Payment rate = DRG weight X standardized

national payment amount (after urban rural adjustment). The nationa] rural rate is 0,5863 X $2,388.08 = $1,400. 13; the nationa]

urban rate is 0.5863 X $2,993.45 = $1,775,06. For DRG 324, with

a weight of 0.4098, the rates are $978.63 and $1,226,72, respectively.

(Standardized dollar amounts are from 49 FR 27446. )

ProPAC to recommend that all

be temporarily classified into

ESWL admissions

DRG 323 (131).

Overall effects of PPS on ESWL depend on

reimbursement for the capital cost of acquiring

the lithotripter as well as the operating costs of

using it. In particular, the overall effects depend

on whether or not capital costs continue to be

treated as a pass-through.7 Under the current provisions, hospitals acquiring the device are reimbursed for Medicare’s share of the actual costs of

depreciation and interest. It is unlikely that this

pass-through provision for capital costs will be

extended past fiscal year 1987 (which ends October 1987), and the decision on precisely how

Medicare’s share of capital expenses will be paid

in the future may have a substantial effect on hospitals’ decisions to install ESWL units. Any difficulty in recovering the average costs of serving

Medicare patients could be exacerbated if capital

costs are incorporated into PPS.8

Hospital Strategies

As hospitals gain experience with ESWL, the

per-case costs of ancillary and routine care services are likely to decline. Length of stay for ESWL,

for example, already appears to be declining.

However, if more hospitals continue to acquire

ESWL units and the caseloads at each hospital

declines accordingly, low per-case costs will be

‘Capital costs include such factors as depreciation on plant and

equipment and interest on loans for these acquisitions. Under current Medicare law, the proportion of these costs that apply to

Medicare-related treatment are paid to the hospital as a “passthrough, ” i.e., reimbursed at actual cost rather than as a part of

the per-case payment rates. Congress and the Department of Health

and Human Services are currently considering a number of proposals

to reimburse capital expenses, such as a flat percentage add-on to

DRG payment amounts (73),

‘The extent to which the inclusion of cap] tal costs in PPS will affect hospitals’ purchasing decisions regarding ESWL depends on

whether hospitals consider the investment in terms of the income

generated by the DRG payments for urinary stones, or whether they

consider the investment in terms of total anticipated surplus from

all DRG payments, Ii, for example, all DRG payments were increased

by 7 percent to cover capital costs, hospital administrators under

the first strategy might decide not to invest because the additional

7 percent of the rate for urinary stone treatment wouid be unlikely

to cover the purchase price of the ESWL device. Administrators making decisions under the second strategy, on the other hand, might

consider the investment if they had no other significant capital obligations that year, because the additional 7 percent of total 1’1’S revenue would cover the price.
6 6

more difficult to realize. Unless payment rates rise,

profits will also decline.

Nevertheless, there are a number of incentives

to provide ESWL, and a number of strategies for

providing it, that exist even if a hospital expects

little or no profit (or surplus) from providing the

service to Medicare patients. For example, a minimal profit from providing ESWL may be acceptable if it is dependable, with little variation in costs

among patients treated. One advantage that

ESWL (when performed alone) holds over all the

invasive alternatives is the potential for fewer

postprocedure complications (187). As a result,

hospitals may be able to expect less variation in

the length of stay and fewer outliers.9

Even if hospitals under PPS cannot recoup direct costs when treating Medicare patients with

ESWL, they may still treat these patients in order to enhance their public image and attract other

patients. Or, they may use ESWL if, once the

lithotripter is acquired, treating Medicare patients

enables the unit to be used to full capacity, lowering the per-case costs of all patients treated and

thus enabling the hospital to produce a surplus

from other payment sources.

Two other alternatives are available to hospitals that cannot recoup the costs of performing

ESWL under present DRG payment. First, hospitals can treat patients as outpatients, whose care

is currently reimbursed at cost rather than at a

fixed rate. Second, the hospital could readmit patients who required a secondary procedure to

ESWL (or a second ESWL treatment). In this case

the hospital would be paid twice, and if the secondary procedure were percutaneous lithotripsy,

the second payment would be at a higher rate,

because percutaneous lithotripsy is classified into

the more heavily weighted DRG that includes admissions for major urinary surgery (see table 11).

In some cases the second admission might be at

the patient’s local hospital rather than at the ESWL

center hospital, a situation that would provide a

Wnder Medicare’s PPS, an “outlier” is a patient whose associated costs or length of stay greatly exceeds the mean for the relevant DRG.

financial advantage to the local

to the one providing ESWL.10

hospital, but not

Impacts of ESWL on Medicare Inpatients

The past records of DRGs can give a rough

maximum estimate of the Medicare population

that might use ESWL, as well as some baseline

comparisons for actual use (155). The Medpar

database compiled by HCFA consists of a 20 percent sample of all Medicare admissions during

1981. It was the original source for developing and

verifying the DRG methods currently used by

Medicare to pay hospitals. Table 12 shows data

derived from the Medpar database for admissions

in 1981 in DRGs relating to stone disease.

The surgical DRGs for treatment of urinary

tract disorders (3o4, 305, 310, 311) are relatively

broadly defined and may include a number of

cases beyond those that would ultimately receive

ESWL. This situation occurs because these DRGs

encompass other major ureter and kidney procedures as well as surgery for stones. Estimates derived from the Medpar data should, however, represent the upper limit of stone surgery (155),

DRGs 304 and 305 include major open surgery

on the kidney. Together these DRGs, representing the group of Medicare patients who would be

most affected by the use of lithotripsy, accounted

for 25 percent of all surgery performed on the kidney in 1981. The second major group of Medicare patients who received surgery in 1981 were

those who underwent a transuretheral procedure,

classified into DRGs 310 and 311. These DRGs

accounted for the remaining 75 percent of the

cases that may have undergone a “surgical” procedure for stone removal. To the extent that

ESWL now substitutes for these procedures, there

will be fewer than in 1981. However, some patients who undergo ESWL may need an additional

transuretheral procedure to remove small fragments that do not pass spontaneously. Therefore,

IOA third po55ibiIity is that hospitals might admit patients for care

after they have received ESWL elsewhere, or even on an ambulatory basis in the same hospital. This option is discussed in the next

section on ambulatory ESWL.
67

Table 12.—Medicare Admissions in DRGs Relating to Stone Disease as Represented

in the Medpar Database, 1981a

Mean hospital DRG Mean length

Treatment DRG Admissions charge weight of stay (days)

Surgical and transurethral procedures .. . . . . . . . . . . . . . . .: . . 304 1,725 “ $5,077 1.7952 12,8

305 1,039 3,708 1,7043 11,9

310 6,162 1,534 0.7071 4.9

311 1,779 1,277 0.5871 4.1

Total ., . . . . . . ., . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,705

Medical treatment for urinary stones . . . . . . . . . . . . . . . . . . . . 323 6,691 1,551 0.7131 4.9

324 3,165 1,180 0,5472 3.9

Total ., ., . . ., . . . . . . . . . . . . . . . . . . . . . . . . ....., . . . . . . . . . . . . 9,856

Urinary tract signs and symptoms . . . . . . . . . . . . . . . . . . . . . . 325 6,799 1,577 0.7247 5.4

326 2,020 1,274 0.5875 4,3

327b

o 0 0.5027 3.1

Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,819

a

The Medpar database In 1981 contained a 20-percent sample of Medicare hospital bills It IS maintained by the Health Care Financing Admlnlstratlon and IS the source

from which DRG weights and mean lengths of stay were calculated

bThls DRG represents treatment for urlnaV stone symptoms for children aged 0.17 The Medpar database dld nOt tnclude cases in ~hls 9rou P due to insufficient ‘umbers The Medicare data was supplemented by data from Maryland and Michigan to derive DRG weights and mean lengths of stay

SOURCE U S Department of Health md Human Serv!ces, Health Care Flnanclng Adminlstrat!on data, as cited In J.A Showstack E J PerezStable, and E Sawltz,

Extracorporeal Shock Wave Llthotrlpsy Cllnical Application and Medicare Physician Payment, ’ paper prepared for the Off Ice of Technology Assessment

Washington, DC August 1 1985

the expected reduction in transuretheral procedures due to the introduction of ESWL may not

be as great as the reduction in open procedures

(155).

Medicare currently pays for ESWL as an inpatient procedure in DRGs 323 and 324, which

are for the medical treatment of stones. Presumably these DRGs include patients who are admitted for supportive (fluid and analgesic) therapy

until the stone is passed spontaneously. They may

also include metabolic workups for stone disease.

In 1981, there were almost as many Medicare

admissions in these DRGs (8,856) as there were

total surgeries in DRG 304, 305, 310, and 311

(10,705) (155). As currently used, ESWL has only

a small role in the acute care of patients with

stones, and it is unclear how substantially this

large pool of stone disease will be affected by

ESWL. It can be argued that as ESWL becomes

more common, the criteria for its use in the acute

phase of stone disease will be less restrictive, and

many of these patients may receive ESWL. Thus,

there would be a shift from conservative medical

treatment to more direct interventions (155).

The difficult problem faced by Medicare is to

ensure access to ESWL without encouraging,

through high payment rates, overpurchase of

ESWL units and overuse of them once they are

installed. Since overpurchase, which leads to

higher per-case costs, and overuse, which implies

unnecessary care, can both lead to higher Medicare expenditures than would occur under more

prudent use, the problem is not a trivial one.

One strategy is for Medicare to pay for ESWL

admissions at a rate very close to (or even lower

than) average costs, a strategy with several potential effects, First, Medicare total payment rates

(including payments for capital expenses) that are

lower than average costs11 may discourage purchase of a Dornier lithotripter in some instances,

if potential purchasers anticipate that Medicare

patients will be a significant proportion of the

lithotripter caseload. To the extent that this disI I Average costs = total costs + number of patients served. Average costs decline as the number of ESWL patients increases, but at

high numbers they may decline very slowly They are contrasted

with marginal costs, which are the additional costs incurred from

treating one more patient. For ESWL, marginal costs include the

cost of that patient’s anesthesia, electrodes, electricity, other supplies, laboratory and radiologic tests, and patient care. They do not

include the cost of the machine itself, which has already been incurred and remains even if no patients at all are treated. Within the

caseloads for which ESWL has been used to date, average costs have

probably been higher than marginal costs.
6 8

incentive restrains all but a few hospitals in any

region from installing ESWL units, the low payment rates will themselves help ensure that percase costs stay low because the machines that exist can be used to capacity. Low Medicare payment rates may also discourage unnecessary

ESWL procedures where patients can be treated

more appropriately with safer or less expensive

therapies. Thus, low payment rates may reduce

Medicare expenditures still further while actually

enhancing the quality of care provided to those

individuals who might have undergone unnecessary procedures. However, to the extent that all

patients must travel further and wait longer for

ESWL due to fewer devices, low Medicare payment rates will reduce access to ESWL.

Another effect of low Medicare payment rates

may be to reduce access to ESWL specifically for

Medicare patients. Some centers may be willing

to treat Medicare patients as long as payments

cover the marginal costs of ESWL treatment (i. e.,

the costs of actually using the machine on that

patient, such as staff time, supplies, hospital bed,

and ancillary tests, but not including capital

costs). Facilities that cannot recover even these

marginal costs of treating Medicare patients will

have strong incentives not to treat such patients

if alternatives are available. For example, a hospital might encourage physicians to provide alternative (and possibly less safe) treatments to these

patients, if alternatives existed with costs that were

lower than the respective reimbursement rates for

those therapies, Or, the facility could encourage

physicians to refer Medicare patients to another

ESWL unit. Since few ESWL treatments are done

to resolve immediately life-threatening complications, the latter is an entirely plausible scenario;

some patients might be given a choice between

a long wait for treatment at that facility or a referral to an ESWL unit in another facility, another

city, or even another State.

If hospitals can recover the marginal but not

the average costs of treating Medicare patients,

then all fixed costs (e.g., interest, depreciation,

maintenance contract) must be borne by other

payers of patients receiving ESWL. As chapter 5

demonstrated, the charges of most hospitals currently providing ESWL are probably considerably higher than their costs, Individuals or thirdparty payers that reimburse for services on the

basis of charges would bear most of the fixed costs

of the ESWL units in this scenario.

An issue currently faced by Medicare is whether

to change the DRG payment level for ESWL.

Three methods of changing payment have been

proposed. First, payment for ESWL could be

changed by recalculating the costs of the two

DRGs in which it is currently classified (“recalibration”). The effect of this strategy would be to pay

for patients who receive ESWL at a rate close to

average costs and to pay for patients in those

DRGs who receive other therapies at a rate higher

than average costs. This strategy would probably

have little effect on the incentives of hospitals to

encourage physicians to treat patients with ESWL

rather than surgery. A second option would be

to reclassify ESWL into the DRG that includes

open and percutaneous surgery for stones. This

alternative would offer hospital administrators a

direct incentive to encourage physicians to offer

the least costly of the three procedures. However,

it could also increase expenditures of the Medicare program by offering an incentive to perform

ESWL on patients who would not otherwise be

considered for aggressive treatment. A third alternative is to create a new DRG exclusively for

ESWL. This option would most accurately reimburse actual average costs, but it would not necessarily discourage hospitals from overpurchasing. It also set a precedent for gallstone lithotripsy,

which may soon face similar issues.

Finally, a fourth option that has not been proposed publicly would be the inclusion of ESWL

procedures in DRGs 310 and 311, the DRGs for

transurethral procedures. These DRGs have weights

slightly higher than DRGs for medical treatment

but considerably lower than those for open surgery.

Payment to Ambulatory Facilities

Because of its noninvasive nature, ESWL probably can be used safely on an ambulatory basis

under controlled circumstances for selected patients, where the patient is available to a urologist for pre- and postprocedure observation and

testing and where appropriate hospital facilities

are readily available for any postprocedure complications. As yet, ambulatory services, includ-
6 9

-- —

ing hospital outpatient services, are not incorporated into PPS.

Ambulatory services are reimbursed by Medicare under Part B, the Supplementary Medical Insurance program. Unlike Part A, Part B requires

the beneficiary to pay monthly premiums, an annual deductible, and 20-percent coinsurance for

many (but not all) services. The services provided

by physicians, or in physicians’ offices, are paid

separately from the services provided in other facilities and are discussed in the next section. This

section describes payment to other ambulatory

facilities, namely hospital outpatient departments

and ambulatory surgical centers (ASCS), which

can receive direct Medicare payments to cover the

costs of the facility, nursing and other staff services, routine supplies, and equipment.

Services provided in a hospital outpatient department are currently reimbursed by Medicare

on the basis of the actual cost of providing them,

unless the outpatient department has been

separately certified as an ASC, Hospital outpatient services are not limited to any specific set

of procedures.

By contrast, ambulatory services provided in

a Medicare-certified ASC facility, either hospitalbased or free-standing, are reimbursed according

to a fee schedule. Only procedures specifically approved by HCFA for provision in an ASC are reimbursable under Medicare in this setting. Each

procedure is classified into one of four rate categories, depending on the complexity of the service. An ASC is reimbursed at the appropriate full

rate for the primary procedure performed and at

50 percent of the appropriate rate for secondary

procedures. ESWL has not yet been included as

a reimbursable procedure when performed in

ASCS (189).

The HCFA coverage decision for ESWL did not

explicitly restrict payment to inpatient ESWL

treatment, so hospital outpatient ESWL is reimbursable under Medicare (205). The financial incentives under Medicare for hospitals to provide

ESWL to ambulatory patients rather than inpatients will depend on: 1) whether the DRGbased payment is higher than marginal hospital

costs, encouraging hospitals to increase hospital

admissions for lithotripsy; 2) whether hospital

outpatient services become incorporated into PPS;

and 3) whether a significant proportion of ambulatory patients receiving lithotripsy subsequently require hospital admission for postprocedure complications.

Medicare’s policy is not to pay for hospital outpatient services if the patient was admitted to the

hospital immediately afterwards (48 FR 250),

though this policy may be very difficult to enforce. If a patient is given ambulatory lithotripsy

treatment but must be admitted as an inpatient

afterwards due to complications or a need for observation, the hospital should, according to regulations, be reimbursed only for the inpatient

stay; the costs of the outpatient ESWL treatment

would be disallowed. However, as long as ESWL

treatment is classified into a medical DRG, the

hospital has little to lose by trying outpatient

treatment first because an admission after ESWL

treatment could still legitimately be classified as

medical treatment for urinary stones and thus

would be reimbursed at the same rate as an admission that included ESWL treatment. Unless the

preprocedure treatment was detected and payment for either the admission or the ambulatory

procedure was denied, the hospital would receive

payment not only for the costs of outpatient

ESWL, but also payment for the post-ESWL admission at the same rate as if that admission had

included ESWL treatment.

The incentive for an ASC to offer ESWL to

Medicare patients depends, first, on whether

Medicare approves the procedure as reimbursable

if performed in that setting; and, second, on the

size of the fee paid for free-standing center treatment relative to the cost of providing it, At present

the standard maximum payment for a single ASC

procedure, before labor index adjustments, is $336

(189). An ASC must accept that amount as payment in full for all but the professional components of the service. If HCFA, in the future, were

to include ESWL as a reimbursable ASC procedure, the agency could also create a new rate category for it. Without a higher rate category, there

would be little incentive for ASCS to offer ESWL

to Medicare patients. Nonetheless, the first ESWL

treatment center in northern California, a nonhospital free-standing facility, has obtained Medicare certification as an ASC and has treated Medi-
70

care patients (68). As yet, since ESWL is not on approved charge, except in special circumstances,

the list of approved procedures for ASCs, this fa- is defined to be the lower of the actual charge

cility cannot receive payment from Medicare. billed by the physician, the physician’s custorn

-

Thusr in facilities such as this one, Medicare pa- ary charge for that service, and the prevailing

tients must pay the full facility-related charges charge of physicians in the area for that service. 12

themselves unless they have private insurance that (This method is commonly referred to as “CPR”

covers the service. payment. ) Medicare then ‘pays for 80 percent of

The settings in which ESWL is provided may

be strongly affected by different payment methods and payment levels. At present, because

ESWL is not reimbursed by Medicare when provided in ASCS, only hospitals can receive direct

payments for the facility-related portion of the

the approved charge, less any deductible owed by

the patient. The patient pays the remaining 20 percent. In addition, if the physician does not accept

the Medicare-approved charge as full payment

(“accepting assignment”), the patient is liable for

any charges in excess of the approved amount.

costs of providing ESWL. If hospital outpatient Since ESWL is a new technology, each carrier

services continue to be reimbursed on the basis must determine the approved charge for the proof cost, any hospital in which the DRG payment cedure without any historical Medicare data. Beis lower than cost will have a financial incentive cause ESWL is currently performed by urologists

to provide ESWL to Medicare patients as out- and partially replaces percutaneous and open surpatients rather than as inpatients. gical methods of upper urinary stone removal, the

The Medicare patients currently undergoing prices paid by Medicare for these procedures have

ESWL in ASCS are incurring very high out-of- formed the early basis for determination of paypocket expenses, unless they have supplementary ment for ESWL. Table 13 presents some sample

urologists’ fees for various stone removal proce- insurance that covers the treatment in this setting.

These patients, as well as the ASC providers, may

try to influence HCFA to provide Medicare coverage for ESWL in this setting. If HCFA should

do so, it would probably also need to establish

a new rate category. The current rates were originally based on average charges for procedures in

each category, but the rates have not been increased since they were established in 1982. It

would probably be financially imprudent for any

ASC to provide ESWL to Medicare patients at

present rates.

Payment for Physician Services

Physician services to Medicare patients, regardless of the setting in which they are provided, are

reimbursed under Part B. The amounts paid to

physicians for their services are not determined

either on the basis of cost or by a nationally based

rate schedule. Instead, payment amounts are calculated by the carriers (the Part B Medicare contractors) in each region of the United States and

are based on physician charge data in that area.

Medicare pays physicians for their services on

the basis of the approved charge per service. This

‘

z

’’The customary charge is the physician’s median submitted

charge for that service during the data collection period preceding

the fee screen year. The customary charge is fluid. If a physician

revises his or her fees, the carrier will recognize the change when

processing claims with the new charges” (182). The prevailing charge

is the lowest charge that is greater than or equal to the 75th percentile of the distribution of all physicians’ customary charges weighted

by the number of times each physician billed for the service in that

locality during the calendar year preceding the fee screen year. Since

1972, the prevailing charge is limited in its rate of increase over time

by the Medicare Economic Index, an annually adjusted index that

relates the increase of physicians’ fees relative to increases in costs

and general earnings levels (182).

Table 13.—Sample Urologists’ Fees for Selected

Stone Removal Procedures, 1985a

Procedure Fee

Nephrolithotomy for staghorn stone ... . . . . . . . . . $2,500

Simple nephrolithotomy. . . . . . . . . . . . . . . . . . . . . . . . 1,500

Pyelolithotomy. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500

Ureterolithotomy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500

Percutaneous nephrostolithotomy . . . . . . . . . . . . . . . 2,000

Ureteroscopy and stone removal . . . . . . . . . . . . . . . . 1,250

asee glossary (app. D) for definitions of Procedure terms

SOURCE American Urological Association, “Summary and Recommendations

of the Ad Hoc Committee To Study the Safety and Clinical Effective.

ness of the Current Technology of 1 ) Percutaneous Lithotripsy, and

2) Non-invasive Lithotrlpsy, ” presented to the AUA, New Orleans, Louisiana, May 9, 1985.
71

dures. The price paid by Medicare varies in each

region both because the contemporary charges for

stone surgery vary in each region and because

each carrier establishes rates independently in

various ways.

Massachusetts Blue Cross/Blue Shield, for

example, the carrier for Medicare in that State,

established physician payment for ESWL at a rate

roughly equal to pyelolithotomy15 plus urography,

or approximately $1,250 per procedure (155). Blue

Cross/Blue Shield of Virginia, based on negotiations with the one urologist-owned facility that

performed ESWL in that State as of 1985, agreed

to reimburse physicians approximately $1,200 for

the procedure, about the same level as a percutaneous removal of a stone in the upper ureter, Blue Shield of Greater New York reported that

it had established a negotiated fee “substantially

less than the usual pyelolithotomy fee of approximately $1,900” (155). Blue Cross/Blue Shield of

Texas considered ESWL a routine “surgical” procedure and decided on a level of reimbursement

based on a surgeon’s time involved in monitoring the procedure. A reimbursement level was

established at a rate “somewhat less than $2,000”

(1.55). For many payers, the incentive to offer a

fee lower than that for surgical treatment has been

tempered by the desire to maintain a nonadversarial relationship with both patients and physicians (155). 14

Many Medicare carriers still have little experience in paying for ESWL; carriers in States that

do not yet have lithotripters may have no established policy for payment for the procedure. In

January 1986, HCFA issued guidelines to help carriers develop a “reasonable” charge for the service. In these guidelines, HCFA suggested that physicians might be appropriately reimbursed for

ESWL at a rate comparable to that paid for radiological procedures rather than at a rate comparable to that for surgery (192). Although these

‘‘Pyelolithotorny refers to open surgery for stones in the renal

pelvis.

I ~It is interesting that ES~’L is categorized as “medical” for hidcare hospital payment purposes but is categorized as ‘‘SU rglcal for

physician pa}ment purposes Arguments over whether or not ES\LrI.

1s a ‘ surgical-” procedure (and, by implication, should be performed

only by surgeons) are frequently heated and illuminate the no~rel

characteristics of this technology (see ch, 5).

guidelines are not binding on the carriers, they

help carriers justify paying physicians less for

ESWL than for urinary stone surgery.

Policy is also lacking in an area relating to the

provision of ambulatory ESWL: physician reimbursement for a technical fee. Medicare regulations specify that it will pay for physician services and for supplies “incident to” those services

that are common office supplies and included in

the physician’s bill (42 CFR 405). Because certain

“incidental” services provided by office physicians

(such as radiologists) have substantial equipment

costs, these services are paid by Medicare in two

parts: one part for the professional fee (e. g., for

interpreting an X-ray), and one part for the “technical” fee (e. g., for use of the X-ray equipment).

In essence, the technical fee is the equivalent of

a facility fee for physicians who own and operate major medical equipment in their offices.

ESWL is neither a “common” office supply nor

“incidental” to the patient’s treatment, and HCFA’s

current policy is that no technical fee can be paid

to physicians who own as well as operate ESWL

equipment (72). However, if ESWL is commonly

provided in nonhospital settings, and it is not a

reimbursable ASC procedure, some changes in

this policy may be indicated.

A more general problem with the current

method used by Medicare to pay physicians is that

it does not adjust prices paid for performing new

procedures as the costs of those procedures decline over time. In the short run, while physicians

are learning ESWL, it may be appropriate to pay

for the procedure at the same rate as percutaneous or open surgery. Over time, however, as physicians become more experienced and make more

efficient use of their own time and the support

staff, and as the technology itself evolves, the

costs of performing ESWL will fall. Under the current system, however, the prices paid by Medicare are likely to remain high, because they will

be based on the ample charges of the past. This

pattern has been noted with coronary bypass surgery, in which the initially high charges for the

procedure remained even after the costs of performing it had declined dramatically (140).
72

—

A number of alternative ways to pay physicians

are currently under consideration, and the method

chosen could have some effect on the provision

of ESWL to Medicare patients (182). Figure 2

presents a schematic representation of how these

alternatives, discussed below, relate to the services provided a urinary stone patient.

The least drastic change would involve some

adjustment to the present payment system, retaining the current method of deriving an approved

charge but eliminating differences in payment

among physicians in different specialties or regions providing the same service. Eliminating specialty differentials would be likely to have little

effect on ESWL, at least in the short run, since

at present only urologists perform the procedure.

Eliminating geographic differentials would only

be likely to have an effect if one price were paid

across all States; prices within States are likely

to be similar anyway due to the relatively small

number of lithotripsy centers. As is apparent from

the previous discussion, if differences across States

were eliminated, some urologists might be paid

several hundred dollars more or less than at present.

A third potential adjustment to the present system would be to reevaluate expensive new procedures, such as ESWL, after they have been in

use for a short time and lower the approved

charge if the assessment indicated that the physician costs of providing those procedures had declined. For example, carriers might explicitly reevaluate the relative time required by physician

for ESWL in 2 or 3 years to determine whether

the payment rate should be adjusted.

Taking a somewhat different approach in the

context of the current system, Medicare might

contract with one or more physicians and lithotripsy centers in each area who are willing to provide the service at a lower price than their competitors. The contracting option may be attractive

for Medicare in regions where several lithotripters exist, although it is not without drawbacks.

On the one hand, Medicare holds a small but substantial market share of the demand for this technology, 15 and most physicians would probably

1

’The actual number of people with upper urinary stones who

are eligible for Medicare is unknown, but these patients probably

represent somewhat less than a quarter of the total population with

such stones (205).

dislike losing their entire Medicare business. On

the other hand, if physicians at only certain ESWL

facilities would perform ESWL for the Medicare

price, beneficiaries would either have to use those

facilities (possibly traveling long distances to do

so) or be liable for large uncovered amounts.

Another option for paying physicians is to use

fee schedules, in which each service is reimbursed

at a set fee that does not depend on actual charges

(although the initial schedule could be based on

charges). This option might enable Medicare to

adjust the price of ESWL more easily over time,

either based on an analysis of resource costs or

a comparison of relative charges for ESWL and

alternative technologies. Some fee schedule approaches, however, might require intense negotiations over the relative value of performing

ESWL, similar to current determinations of the

starting “reasonable” rate for performing the procedure.

A third option being considered is payment for

packages of related services. These packages could

take a number of forms. For example, Medicare

could pay for all the inpatient physician services

provided to a patient at a single rate that depended

on the DRG of that patient. Or, Medicare could

package physician services provided in any setting into some classification system analogous to

DRGs and reimburse at a set rate for each package. The first alternative might tend to encourage

outpatient ESWL, while the second might encourage the least costly setting for providing

ESWL. Other alternatives, such as paying a set

rate for all services provided in conjunction with

a particular procedure, could influence the mix

of physicians involved in ESWL and the incentives to provide ESWL rather than alternative

modes of treatment. However, there is no experience with payment for packages that include the

services of more than one physician, and for some

alternatives no usable payment categories have

been developed (182).

A final option, cavitation payment, involves

paying a provider or some intermediary a set rate

per beneficiary for all the covered care used by

that person during the year (or some other time

period), An important feature of cavitation is that

it would encourage provision of the least costly
Alternative Methods for Medicare Payment for Services Provided to a Hypothetical Patient

Presenting the Symptom of Extreme Flank Paina

First office

Visit

primary

physician

Pre hospital ambulatory

First office Urinalysis

Visit

urologist

 services

service

I

,

Radiologist

service

for KUB

X ray’

Anesthesiologist

shock wave

services’

and

I

,

I

1

Urine

service service

services

post

hospital

Urologlsl ”

One office

6

months ~

b An intravenous x-ray of the kidneys and ureters

cx ray of the kidneys, ureters, and bladder.

‘The urolog!st peforml ng ESWL might charge a fee for the ESWL procedure separate from fees for related hospital VI sits or I n stead m I ght charge a global fee coven n g both the procedure and the visit

f some ~ompllcated patients might need to be seen by specialists such as cardlolog!sts

9The current average Ienqth of stay for ESWL IS 33 days (40)

h Mo st Patients ~W

ld need only one post.hospital Vlslt A patient With gout or multl ple stone recurrence might need two post hospital Vlslts and additional vlslts everY 6 months

1 It IS assumed that DRG payment would contl nue for r patient faciIIty services

Jpackaged payment can Include serwces related to an ambulatory or inpatient episode of care or an ambulatory vlslt A total eDlsode-of care package though not shown here would combtne services I n

ambulatory- and I npatlent-episode-ofzare packages A special-procedure package, also not shown here would Include serwces associated with a special procedure such as ESWL

SOURCE Off Ice of Technology Assessment 1986 (182) Based on data from A Jenkins Umvers!ty of VI rglnla Medical School Charlottesvl I Ie VA xrsonal comm(l n Icatlon NOV 26 1985
74

treatment for upper urinary stones among all possible alternatives, including provision in the least

costly setting. Cavitation payment to providers

has been implemented widely in the private sector, including some limited experience with the

Medicare population. Cavitation payment to fiscal intermediaries (e. g., the Part B Medicare carriers), in which the intermediary would then pay

providers for care to beneficiaries, has not been

tried (182).

ESWL illustrates several issues regarding Medicare physician payment policies that are distinct

from hospital payment issues. Incorporating

ESWL into the physician payment system has

posed less of a problem than it did with hospital

payment, largely because the coding system used

to classify and report physician procedures, unlike the hospital coding system, is systematically

and annually updated. ESWL already has its own

code in this system, the Current Procedure Terminology. But unlike Medicare hospital payment,

determining physician payment level is not automatic once classification of a new procedure is

made. Determining that level, done autonomously

by each carrier, has presented a significant issue

that is amplified by the fact that the technology

is one that may become cheaper over time for

physicians to provide.

HCFA has in fact taken an unusual approach

toward establishing appropriate initial physician

payment levels for ESWL. As mentioned above,

in January 1986, HCFA advised carriers to “consider the time and effort involved in other nonsurgical procedures” when “evaluating and determining a reasonable charge for ESWL” (192). It

specifically suggested that carriers pay a global

fee for ESWL and associated pre- and posttreatment physician case, and that the ESWL component of this payment might be more appropriately

compared to certain urinary radiological procedures than to surgical treatments for urinary

stones (192). Addressing the problem more generally, HCFA has recently proposed setting special Part B payment limits for expensive technologies with few suppliers (51 FR 5726).

OTHER PUBLIC PAYERS FOR HEALTH CARE SERVICES

Veterans Administration

VA provides free or subsidized health care services to the eligible proportion of the approximately

30 million veterans of the U.S. Armed Services.

Veterans are eligible to receive VA care if they

have service-connected disabilities, or if they have

nonservice-connected disabilities and are unable

to obtain or pay for needed care. VA operates 172

hospitals around the country and treated about

1.25 million acute care patients in 1981. In addition, VA provides a variety of long-term care and

ambulatory services (174). With an annual budget of approximately $1.3 billion for medical supplies and equipment, VA represents a substantial

market for medical devices (179).

A significant number—about one-fourth—of

patients in VA hospitals with a diagnosis of upper urinary stones are spinal cord injury patients

(102). VA operates 19 Spinal Cord Injury Centers

around the country to provide special, targeted

care to this population (180). Spinal cord injury

patients tend to form recurring urinary stones because their disability usually prevents normal urination, inviting urinary tract infections and requiring a permanent indwelling catheter (102).

Thus, this population has a much higher incidence

of stones than does the general U.S. population.

Routine equipment and supplies needed by VA

hospitals may be purchased at the local level. The

purchase of costly equipment, however, must be

reviewed and approved by the VA central office

in Washington, DC. A list of “controlled items”

for equipment such as X-ray apparatus is maintained by the central office, and purchase of these

items requires an evaluation of need. For expensive equipment, such as CT scanners, the VA central office ranks hospitals by perceived level of

need and allocates funds separately from the individual hospital budgets. In the case of CT scanners, the VA marketing center purchased several
75

devices at once in order to negotiate a group discount (76). The marketing center purchases CT

scanners for other government agencies such as

DOD, enabling the center to combine purchases

and negotiate quantity discounts from manufacturers.

In June 1983, the Chief Medical Director in the

VA central office formed a High Technology

Assessment Group to “determine what course the

VA should follow with respect to acquisition of

major new technology in the future” (168). At the

first meeting of this group in 1984, the group was

presented with data supporting the purchase of

a Dornier lithotripter (102). These data, collected

from a survey by the central office’s Office of Surgical Services, indicated that 4,800 veterans underwent treatment for upper urinary stones in

1984, that the VA could support the purchase of

several lithotripters (102). The Office of Surgical

Services has requested two devices to be purchased in fiscal year 1986 and intends to request

a third in fiscal year 1987. These lithotripters

would be placed in VA hospitals serving a high

proportion of spinal cord injury patients, possibly the facilities in Hines, Illinois; Long Beach,

California; and Memphis, Tennessee (102).

Meanwhile, arrangements to establish an ESWL

facility at the VA hospital in New York City are

already in place. This facility is an example of

shared provision and use of lithotripsy. A Dornier lithotripter is being purchased by the Paralyzed Veterans of America and donated to the VA

hospital. The hospital is providing the facility and

funding renovations; a nearby private hospital is

funding the staff to run it. The private hospital

will refer patients to the facility, although VA patients will have first priority use. The facility is

scheduled to become operative by the end of 1986

(102).

VA is a self-contained system that plans and

purchases its own equipment and is on a finite

budget. This can lead to a small number of ESWL

machines at the facilities and in the areas where

they will serve the greatest number of patients.

A side effect of VA’s self-contained system, however, is that VA’s placement decisions are isolated

from planning decisions made in the community

at large. For example, the first ESWL facility at

the Bronx VA hospital is in an area already served

by one ESWL unit. Of other VA spinal cord injury centers in line for a lithotripter, one is in the

Chicago area (where several other facilities are

planned in the community) and a second is in the

Los Angeles area, which also has several units,

There is no routine mechanism through which to

share facilities or purchase services between VA

and non-VA patients.

Spouses and unmarried children of certain disabled veterans, or survivors of such veterans, are

covered under the Civilian Health and Medical

Program of the Veterans Administration (186).

This health care financing program operates in

an identical manner to the Civilian Health and

Medical Program of the Uniformed Services

(CHAMPUS), described below.

Department of Defense

DOD operates military hospitals for use by persons in the U.S. Armed Services on active duty.

It also operates CHAMPUS, which pays for much

of the health care provided to military families.

CHAMPUS provides payment for medical services to dependents of active duty personnel and

to Armed Services retirees, their families, and

their survivors. It requires no premiums. All eligible persons may receive any inpatient or outpatient services provided at military hospitals. If

they live near a military hospital (within certain

zip codes), they must first determine whether services are available for inpatient care at that hospital before seeking care in the community in order to be covered by CHAMPUS. Ambulatory

care does not require a predetermination of available services at the military facility. Care at military hospitals is provided on a space available basis. There is no charge for outpatient services

received at a military hospital; inpatient services

require a very small nominal charge per day (185).

If a CHAMPUS beneficiary does not live near

a military hospital, or if the hospital has affirmed

that the needed service is not available there, he

or she may seek services in the community. In this

case, CHAMPUS covers both inpatient and ambulatory services unless the beneficiary is also

eligible for Medicare. Inpatient services require
76

a small fee per day or $25 (whichever is more)

on the part of active duty families, and a 25 percent copayment of the approved charges on the

part of retirees and their families. Ambulatory

services require a deductible and a copayment (20

percent of approved charges for active duty families and 25 percent for retirees and their families).

Dependent parents and parents-in-law are not

covered for community services (185).

Since no military hospitals as yet have ESWL,

CHAMPUS pays for the service only in the community. Since there is very little charge history

for the procedure, the program is reimbursing

physicians for the billed charge until enough bills

have been received to permit other calculations

of an approved charge (69).

Indian Health Service

IHS, part of the Public Health Service in the

U.S. Department of Health and Human Services,

provides health care services for Native Americans through its own facilities or through contracted services provided to Native Americans in

other facilities. In 1984, IHS operated 47 hospitals, and an additional 4 hospitals were tribaloperated. These hospitals vary greatly in size, but

most are small; only four have more than 100 beds

(183). There are a number of specialized services

not available in any IHS hospital, such as cardiac

catheterization, burn care, open heart surgery,

and radiation therapy.

In 1984, the IHS service population consisted

of approximately 937, 000 American Indians and

Alaskan Natives, and 102,843 Indian patients

were admitted to IHS, contract, or tribal hospitals (194). Services in IHS facilities are provided

without charge “to persons of Indian descent belonging to the Indian community served by the

local facilities and program” (42 CFR 36). When

specialty care is not available in an IHS direct

service facility, a patient may be referred to a contract care facility (a physician, hospital, or other

provider with whom the IHS has a contract for

service to its population). To be eligible for contract care, an individual must be a member of,

or closely associated with, a tribe that resides

within a designated contract health service delivery area (42 CFR 36). 16 Not all persons that consider themselves Native Americans reside in contract health service delivery areas, and not all that

do are eligible for contract care.

Given the size and primary care orientation of

IHS hospitals, it is highly unlikely that an ESWL

device will be purchased by any of them. If the

IHS hospital does not have surgical facilities, and

urinary stone patients are referred to a contract

hospital, the access of these patients to ESWL will

depend on whether the contract hospital has an

ESWL unit.

l~Indian students, transients, and foster children are also eligible

for contract services.
Chapter 7

Effects of Federal Policies

on Planning for ESWL
Chapter 7

Effects of Federal Policies

on Planning for ESWL

INTRODUCTION

Planning for extracorporeal shock wave

lithotripsy (ESWL), whether done on the institutional, local, or regional level, may be affected

by Federal policies in two ways. First, to the extent that institutional or local planning is driven

by market concerns, it is affected by the Federal

payment programs described in the previous chapter. Second, ESWL distribution and use may be

affected by Federal health planning policies, which

operate largely through State certificate-of-need

(CON) laws and entail review and approval mechanisms. The Federal Government has been a

strong proponent of regional health planning for

much of the past decade, although interest has

waned in the past few years,

The rationale for planning policies is that they

may improve the distribution of major health facilities and equipment for which the market alone

does not provide an acceptable solution. Under

Medicare cost-based reimbursement for inpatient

services, 1

it was hoped that planning policies

would curb oversupply of hospital beds and expensive equipment. Hospitals under cost-based

reimbursement had a financial incentive to acquire

qualified success, In the past few years, representatives of the Federal Government, disillusioned

with the inability of planning policies to curb high

hospital costs and Medicare expenditures have

emphasized payment policies as the mechanism

through which to encourage providers to restrain

hospital expenditures. But planning laws are still

in place in most States, and planning as well as

payment policies may have a strong effect on the

adoption, diffusion, and distribution of ESWL.

Government planning policies may also interact

with the activities of providers—particularly hospitals and hospital chains, physician groups, and

management companies—to lead to new ways of

providing services that have major implications

for the availability and distribution of ESWL.

This chapter examines the ways that federally

stimulated-health planning policies, particularly

the CON program, and other less centralized

activities are affecting the distribution, cost, and

availability of lithotripsy. It then describes the interaction of the formal planning system with the

market-based planning activities and the implications of these new organizational arrangements

for acquiring and providing ESWL, Finally, it discusses the effects of technological change, including advances in the use of ESWL, on the provision of this technology.

and use expensive technologies, with few countervailing influences. Requiring these facilities to

get prior approval for capital expenditures was

one potential way to prevent health facilities from

acquiring more beds and expensive equipment

than was necessary to ensure that sufficient services were available to the local populations.

The State CON programs that have been en- ‘Prior to October 1983, Medicare paid all hospitals on the basis

of Medicare’s share of the costs of the inpatient services provided

couraged by Federal law have not met with un- in those hospitals, As costs rose, payments rose accc~rd i ngl}~,

FEDERAL PLANNING POLICY AND THE CON PROGRAMS

The Federal Government has been involved in cilities (6). Laws passed in the 1960s provided Fedhealth care planning for some time, an interest eral funding to regional health planning agencies

originally arising out of its substantial involve- to support a variety of planning activities, includment in financing the expansion of health care fa- ing the review of projects being evaluated by the

79
8 0

fledgling State CON programs (6). The Social

Security Amendments of 1972 (Public Law 92-603)

extended Federal involvement in local and regional planning through the section 1122 provisions, which authorized the Federal Government

to enter into voluntary agreements with States.

Under these agreements, Medicare and Medicaid

could withhold payment for their depreciation

and interest shares of certain capital investments

made by health care facilities if State or local

health planning agencies did not approve those

investments. (Section 1122 does not apply to operating costs. ) However, due to limitations in authority and in financial support, these agencies

were largely ineffective (6).

Congress continued to express its resolve to encourage health planning with the National Health

Planning and Resources Development Act of 1974

(Public Law 93-641). This major planning legislation set up a consolidated system of local health

systems agencies to plan, State planning agencies

to regulate, and State coordinating councils to advise and link the two (6). It also established planning and development grants, and—most importantly—it required that States pass CON laws in

order to receive future health-related funds from

the Federal Government. s

The State CON Programs

CON laws, passed by the individual States, empower State planning agencies to deny reimbursement to hospitals for large capital expenditures

unless the agency finds a “need” for the service

to be provided. In order to comply with Federal

regulations, States must have laws mandating

CON review for certain new institutional health

expenditures. These laws must include prior approval for all equipment purchases over $400,000

2 For the purposes of section 1122, “health care facilities” include

hospitals, kidney disease treatment centers, skilled nursing facilities,

intermediate care facilities, rehabilitation facilities, and ambulatory

surgical facilities (42 CFR 100).

‘Public Law 93-641 stated that if a State had not enacted a CON

program by 1979, that State would not receive “any allotment, grant,

loan, or loan guarantee, or . any contract, under this Act, the

Community Mental Health Centers Act, or the Comprehensive Alcohol Abuse and Alcoholism Prevention, Treatment, and Rehabilitation Act of 1970 for the development, expansion, or support of

health resources in such State until such time as such an agreement

is in effect. ”

and all new institutional health services with operating costs over $250,000 per year (42 U.S. C.

300). States may have lower but not higher thresholds and remain in compliance with Federal law.

By 1983, all States but one (Louisiana) had

CON laws. However, numerous problems have

plagued the CON-based planning system since it

was instituted in 1974. Observers have suggested

that health planning agencies have neither the resources nor the incentives to fully enact their legislative powers (171), and early studies found little effect of CON on hospital investment (74).

Also, Federal regulations do not require that new

equipment acquired by physicians’ offices be covered under CON laws, a deficit identified early

in conjunction with the diffusion of computed tomography (CT) scanners (175).

The extent to which CON laws are actually effective in reducing unnecessary services (and

costs) is still an active subject of debate, and recent Federal funding for the CON-based planning

program has stipulated that States not complying with the act not be penalized (179). Consequently, many States’ laws are no longer in compliance with Federal thresholds, Table 14 presents

the status of laws in each State as of April 1986.

As of that time, 11 States had raised one or more

of their CON thresholds above the Federal maximum levels, and eight States had no CON laws

at all (158).

The Dornier lithotripter, with its cost of about

$2 million, exceeds the equipment purchase

threshold levels for CON approval in all of the

States with CON laws. In many States, the addition of an ESWL unit may be considered a new

institutional health service, rendering the unit subject to CON review on the basis of its high operating expenses as well. In 1984, potential ESWL

providers in the States with CON laws generated

a total of 94 applications for the purchase of extracorporeal lithotripters (78). In the first half of

1985, 175 CON applications for ESWL were received (39), and at least two States (Mississippi

and Oklahoma) have developed specific guidelines

for ESWL (193).

Because CON review for ESWL may be invoked either on the basis of purchase costs or

operating costs, in theory CON laws could de-
Table 14.–Certificate-of .Need Thresholds in Each State and the District of Columbia, 1986

Expenditure threshold requiring approvala

1,000,000 —

600,000

1,000,000

2,000,000

714,000

150,000

600,000

600,000

600,000

600,000

—

600,000

750,000

600,000

—

600,000

—

350,000

600,000

600,000

150,000

—

600,000

600,000

750,000

500,000

600,000

600,000

150,000

—

300,000

600,000

600,000

600,000

600,000

variable

600,000

150,000

600,000

600,000

1,000,000

—

—

150,000

600,000

1,000,000

600,000

600,000

714,000

New health services

$ 200,000

any expenditure

—

250,000

certain services

1,000,000

any expenditure

any expenditure

250,000

250,000

any expenditure

any expenditure

—

certain services

o

250,000

—

250,000

—

135,000

250,000

250,000

0

—

150,000

250,000

100,000

250,000

250,000

250,000

any expenditure

—

any expenditure

250,000

250,000

250,000

250,000

250,000

250,000

75,000

250,000

250,000

any expenditure

—

—

any expenditure

any expenditure

500,000

250,000

250,000

150,000

Equipment

Require approval for

some physician-owned Repeal or 1122

State Capital

Alabama ... . . . . .$ 600,000

Alaska ., ... . . . . .

Arizona ., ., ., ... .,

Arkansas . . . . . .,

California ., . ,

Colorado, ., . . . .

Connecticut . ., . .

Delaware . . . . .,

Dist. of Col, ., . .

Florida ., ., . . . . . .

Georgia. . . . . . . .

Hawaii . . . . . . ., . . .

Idaho ... ., . . . . . . . . .

Illinois ., . . . . . . . . . .

Indiana ... . .

lowa .. ....,, ., ., ., .

Kansas . . . . . . . . . . .

Kentucky . ., ., .,

Louisiana . . . . . . ., .,

Maine . . . . . ., .

Maryland . . . . . . . . .

Massachusetts ., ...

Michigan . . . . . . . . .

Minnesota . . . . .

Mississippi . .

Missouri . . . .

Montana ... . .

Nebraska . ... . . . .

Nevada . . . . . . . . . .

New Hampshire . . . . .

New Jersey ., . . . . .

New Mexico, . . . . . . .

New York . . . . .

North Carolina. . . . . .

North Dakota ., .

Ohio ., ., . .

Oklahoma . . . . . . .

Oregon ., . . . . . . . . .

Pennsylvania . . . . .

Rhode Island . . . . . . . .

South Carolina ... .,

South Dakota. . . . . . .

Tennessee .

Texas . . . . . . .

Utah ., ., ., . . ., . . . .

Vermont ., . . . . . . .

Virginia . . . . . . . . . . . . .

Washington ., . . . . .

West Virginia. ., .

Wisconsin . . .

Wyoming . . . . . . . . . . .

“Mafly states have indexed capital “rlcl new health services expenditure thresholds to some measure Of Inflation Most States with Indexing use 1979as the base Year

and Index according to Increases (n the composite construction cost index Most States with a 1979 base year index now have capttal expenditure thresholds of $736,250

and new health serv}ces thresholds of $306,750 (158).

bonly some pc)rtlons of the statute are scheduled to sunset

SOURCE J B Slmpmn, “Full Circle The Return of Certlflcate.of. Need Regulation of Health Facll!tles to State Control, ” /nd/ana Law Review 19(4) forthcoming Summer 1986

$ 200,000

1,000,000 —

400,000

1,000,000

1,000,000

400,000

150,000

400,000

400,000

400,000

400,000

—

400,000

750,000

400,000

—

400,000

—

300,000

Iicensure

400,000

150,000

—

400,000

400,000

500,000

400,000

400,000

400,000

150,000

—

300,000

400,000

400,000

1,000,000

400,000

400,000

400,000

150,000

400,000

400,000

1,000,000

—

—

125,000

400,000

1,000,000

400,000

600,000

400,000

equipment

no

no

—

no

no

yes

yes

no

yes

no

no

no

—

no

no

yes

—

no

—

no

I i censure

no

no

—

no

yes

yes

no

no

yes

no

—

no

no

yes

no

no

yes

no

yes

no

no

no

—

—

no

yes

no

yes

yes

sunset date program

none

none

March 1985

none

January 1987

indefinite

none

none

none

July 198 7

b

none

none

June 1983

January 1986b

June 1987

none

July 1985

none

Never enacted

none

none

none

none

June 1984

July 198 6

none

July 198 7

none

none

none

none

June 1983

none

none

none

none

1989b

none

none

none

none

none

June 1991 b

September 1985

January 1985

none

none

none

none

JU IY 198 9

no

no

no

yes

no

no

no

yes

no

no

yes

no

yes

no

yes

yes

no

yes

yes

yes

no

no

yes

yes

no

no

no

yes

no

no

yes

yes

no

no

no

no

yes

no

no

no

no

no

no

no

no

no

no

no

yes

no

yes July 1989 no
82

lay or prevent many ESWL purchases in States

that have such laws. However, if new, cheaper

machines are approved for marketing, they may

not require CON approval in States that exceed

the Federal equipment threshold unless they are

considered new health services.

Nearly all States with CON laws require review

of new health facilities, including ambulatory surgical centers (158). However, ambulatory ESWL

may be exempt from CON laws if a center offering only ESWL is not considered a surgical center under that State’s laws. California, for example, requires CON review of ambulatory surgical

centers (94), yet the first Dornier lithotripter in

northern California was installed in a free-standing ambulatory center without undergoing CON

approval for either the facility or the equipment

(68). As demonstrated in table 14, only 15 States

require licensure or CON review of equipment

that may be used for persons who are not patients

of a health care facility (158).

In States with weak or absent CON laws, it is

possible that the section 1122 process, which allows Medicare and Medicaid to refuse to pay their

share of the capital costs of major equipment

whose purchase is not approved by a State

agency, may again have some effect. Without a

CON process, Medicare and Medicaid may

choose to refuse to pay their share of the capital

costs of ESWL for patients treated in unapproved

facilities in those States that have a section 1122

agreement with the Federal Government. If this

should occur, and if some facilities refused to treat

Medicare and Medicaid patients as a result, these

patients might be required to travel further for

treatment. Those close facilities that consequently

treat a smaller caseload might also have higher

average costs as a result. At present, the section

1122 program is based on voluntary State participation, so it is likely to be a factor only in the

four States with a section 1122 agreement but no

CON program. However, if Congress does not

pass legislation incorporating capital expenses into

the Medicare prospective payment system, section 1122 participation will become effectively

mandatory in every State (42 U. S. C., 1395).

The Effects of CON and State

Health Planning Systems

CON laws appear to be influencing the growth

of new arrangements for purchasing, sharing, and

providing ESWL in two ways. First, they maybe

encouraging the movement toward the provision

of sophisticated services, such as ESWL, in ambulatory settings, Second, they appear to be encouraging, at least in a few States, the joint purchase of ESWL units by hospitals, physician

groups, and management companies.

As they exist in most States, CON laws offer

an incentive for health care providers to provide

certain very expensive technologies out of the hospital altogether in order to avoid the time and expense (and possible rejection) of CON review.

This incentive may have affected the service setting of both CT and MRI. Four years after their

introduction into the United States, 18 percent of

CT seamers were located in ambulatory facilities.

Thirty-nine percent of MRI equipment were located in ambulatory facilities after an equivalent

period of time (169). Free-standing imaging centers

have emerged as an increasingly common phenomenon around the country (64). ESWL appears

to be moving towards a similar diffusion pattern

that will include an increasingly large number of

free-standing ESWL centers as well as an emphasis on outpatient ESWL at many hospitals.

Shared purchase of major equipment among

several hospitals or physicians has become a recently familiar theme in health care (96), a nd

ESWL exemplifies a diverse array of such shared

purchase arrangements. In Washington, DC, for

example, three hospitals are copurchasing a lithotripter that is sited at one of the hospitals (60).

In Cleveland, Ohio, two hospitals planned joint

purchase of a lithotripter, sited in a separate facility, in order to share expenses and speed CON

approval (56,113). In Memphis, Tennessee, six

hospitals and a group of urologists have created

a for-profit company to purchase a lithotripter

that will be located at the University of Tennessee Medical Center if the project receives CON
83

approval (123). The ambulatory lithotripsy center in Los Gates, California, is jointly owned by

several hospitals, urologists, and Uro-Tech Management Corp. (86). J In Dallas, Texas, several

hospitals and urologists are planning joint establishment of a lithotripsy center for the International Biomedics lithotripter, currently under development, to be installed when it begins clinical

trials (127).

Although CON laws (and their administration)

appear to be encouraging some of these joint purchasing arrangements, the two do not necessarily

coincide. Planners in southwestern Pennsylvania,

for example, have attempted to encourage such

shared purchase but have been unable to do so

(36). Instead, this planning agency must attempt

to set priorities for ownership of ESWL units

among individual hospitals. The Health Planning

Council of Greater Boston has similarly relied on

setting priorities for acquisition. This planning

agency, which produced the first thorough planning study for ESWL in the United States, determined that in the short run there existed a need

for only one lithotripter in the area served by that

planning agency, and that the hospital operating

the unit would serve as a referral center for other

hospitals in the area. Permission was granted to

Massachusetts General Hospital to house the

lithotripter, and that hospital became one of the

six investigational sites in the United States to obtain Food and Drug Administration approval for

ESWL. A second Boston area hospital has since

received approval for and installed a machine

(48,125).

In some areas limited joint purchase and shared

use are not enough to obtain CON approval. The

Virginia Department of Health rejected a proposal

to locate an ESWL unit in the Virginia suburbs

of Washington, DC, even though the unit was to

be jointly purchased by two area hospitals and

a group of area physicians and located at a large

suburban teaching hospital (140). The justifica-

‘Llr{~-’l_ech, a private management company, holds partial owmershlp In a number ()[ ESWL units, including the tirst three lithotripters l(lcated in tree’-5tanding ambu]at [Jry care center> ( ]n Cdl it(~rnlcl

North Cart}llna, and Flc~rlda ) (4 I )

tion for rejecting the proposal was that the proposed service area of 1..5 million population was

not sufficient to support a extracorporeal lithotripter, especially since it was likely that one or more

lithotripters would eventually be located in Washington, DC, itself (141 ). The Virginia Department

of Health’s rationale has since been supported by

the fact that three Washington, DC, hospitals

have received permission from the District planning agency to jointly acquire an ESWL unit, and

the fact that hospitals in several nearby Maryland

suburbs are considering ESWL purchases (51 ).

Maryland requires licensure, but not CON approval, for major medical equipment,

A contrasting example is set by Chicago, in

which numerous ESWL units may exist almost

side by side. Two hospitals in Chicago already

have approval for ESWL. One of these, Michael

Reese Hospital, is a testing site for ,Medstone’s

ESWL device. The Chicago Health Systems

Agency has recommended further approval for

extracorporeal lithotripter purchases by three

other major Chicago hospitals (all associated with

universities), for a potential total of five devices

in the metropolitan area (56). Finally, the Veterans

Administration plans to install an ESWL unit at

one of its hospitals in the Chicago area (102), a

decision outside the control of the planning

agency. 5 Thus, it is conceivable that six ESWL

units could compete for patients within the same

metropolitan area.

These examples illuminate the fact that generalities regarding the overall impact of CON laws

on the diffusion and distribution of ESWL are difficult to make. In a few States, the planning process seems to be encouraging joint purchase of

ESWL and may restrict the number of devices be-

- Under Pubilc Law Q3-~41, the National Health 1’lanning and

Resources De\’elopment Act (~t 1974, the L’A was g]~ren t’~~tlng membership on State health coordinatin~ counci]~ and [~n re~l(~nal health

s}’stems agencies, A L’A hospital was supposed to submit an application to the health systems agency for new con+truct i{}n or eclu]pment. The a~ency made a recommend atitln to the L’A Central Ot-

/ Ict’, which could approve [Jr d isappr~~~’e w.i thou t regu la t (~r}”

constraint and did not have to explain its action” ( 180), \’A \ participation in the health planning process is ~rolunta~r and State pl,]nn i ng c ou ncl Is hat~e no authority to disapprol. e the insta 1 lrnent ~) t

an ES\$’L unit in a \rA facillt}.
84

low the number that would have been acquired

were there no planning laws. In other States, however, even those with fully functional CON laws,

planning seems to be having no restrictive effect

whatsoever. For the United States as a whole, it

is unlikely that planning laws will restrain ESWL

purchases below the numbers that various organizations have estimated would be sufficient (see

ch. 5). The Blue Cross and Blue Shield Association, for instance, has suggested that the entire

U.S. population could be adequately served by

50 ESWL units (14). But Dornier had 50 ESWL

units installed in the United States by the end of

1985 and plans to have 100 in place by the end

of 1986 (125). The existence of planning laws

seems highly unlikely to restrict the overall number of devices to a minimum level.

A contrast to the U.S. planning experience with

ESWL is provided by Australia. About 80 percent of acute health care in that country is provided in public hospitals, and expensive technology acquired by those hospitals must be approved

and financed through the state governments (148).

The Australian Department of Health’s National

Health Technology Advisory Panel has produced

a full assessment of ESWL to assist the states in

planning for the technology. The panel concluded

that although the technology is “more expensive

than percutaneous stone removal it appears to involve less cost than open surgery and offers significant patient benefit compared with both of

these alternatives” (38). The panel estimated the

number of eligible patients with upper urinary

stones in each state in the Commonwealth of Australia and concluded that Australia had an annual

demand for ESWL of 2,500 to 3,000 patients.

Based on this figure and a target caseload of 1,200

to 1,400 patients per machine per year, the Panel

concluded that (38):

On the basis of current numbers of procedures

for upper urinary tract stones, not more than

three ESWL machines would be needed for Australia, two of which should be located in Sydney and Melbourne. However, geographical factors may result in a need for additional machines.

The machines should be sited in hospitals which

have well developed urology and radiology departments, with appropriate access to percutaneous (PCN), surgical and transurethral procedures.

The number of machines required should be

kept under review in the light of the length of

time patients must wait for treatment and future

technical developments. Availability of second

generation equipment may became a significant

factor in the medium term and could influence

decisions of procurement of a third machine.

PLANNING AND THE DYNAMIC MARKET

Planning for ESWL, as with most technologies, Technologies to reduce the incidence of urinary

is complicated by the existence of a dynamic mar- stones among those people with frequently recurket. In this case, the market is changing on five ring stones are an important unknown in the stone

fronts: treatment market. These technologies may be

1.

2.

3.

4.

5.

technologies to reduce the recurrence of urinary stones, and consequently the overall incidence of stones;

improvements in invasive treatments for urinary stones;

the emergence of competing manufacturers

of ESWL equipment;

experience in the most appropriate role for

ESWL; and

modifications in the Dornier lithotripter to

extend its uses.

small in number and effect, or they may exert an

important influence on the population. In the extreme, if preventive measures were successful, a

significant proportion of second stones could be

prevented, and the total number of patients needing treatment for problematic stones could be substantially reduced. Under the latter scenario, those

patients who did have stones would likely be having their first experience with this problem, and

they would be at less of a risk for untoward outcomes associated with invasive procedures. This

consideration might affect decisions regarding
85

which treatments were most appropriate; fewer

patients might be referred to ESWL out of a fear

that multiple surgeries might endanger the kidney. Urologists disagree over whether preventive

medications such as potassium citrate can prevent

more than a small proportion of stones in the immediate future, Still, such medications remain a

highly important treatment for study that may be

both effective and cost savings for certain patients.

Improvements in current invasive alternatives

to ESWL, particularly percutaneous removal of

stones, may have a much larger and more immediate effect. In centers in which percutaneous

lithotripsy is performed on high volumes of patients, by surgeons with sufficient experience and

expertise, this procedure may be very comparable to ESWL in cost and clinical appropriateness.

Percutaneous lithotripsy will have particular appeal to those urologists who do not have access

themselves to ESWL and to hospitals who cannot justify or afford ESWL equipment. A danger

of the appeal of percutaneous lithotripsy is that

the lower costs, higher success rates, and broader

use demonstrated by urologists performing this

procedure in higher volumes may not be attained

by less experienced operators in less efficient settings. Also, urologists without access to ESWL

may be reluctant to refer patients to a urologist

who does perform ESWL unless those patients are

clearly unsuitable for more invasive procedures.

If existing trends continue and percutaneous

lithotripsy proves to be clinically and financially

competitive with ESWL when performed by most

physicians in most hospitals, the use of ESWL

might decline despite the existing fixed costs of

expensive equipment already in place.

In contrast to the above scenario, the existence

of competing manufacturers for ESWL could dramatically expand the use of this technology. It is

the high cost of ESWL equipment that draws the

attention of third-party payers, causes ESWL to

come under the jurisdiction of CON laws, and invites the scrutiny of planners where anticipated

caseloads of equipment to be purchased are small.

Competing manufacturers are emphasizing the

lower cost of their equipment, which might justify

the existence of many more machines. However,

the competing lithotripters are not yet clinically

proven, and their actual costs cannot be judged

until these devices have been installed and used

on a number of patients. The competing device

apparently closest to marketing in the United

States, the Medstone lithotripter, had treated only

four human patients as of the end of 1985 (4).

Thus, this device is unlikely to be available for

general marketing before the end of 1986, even

if it proves to be clinically effective.

Experience in the most appropriate uses of

ESWL, both current and future models, is an important area of investigation, especially in light

of the rapid evolution of percutaneous stone

removal, Increased understanding of the limits of

ESWL might lower its use relative to percutaneous procedures. Conversely, increased appreciation of its possibilities for treating difficult stones

when used in combination with percutaneous and

transurethral procedures may increase the use of

ESWL.

Finally, the market for ESWL could be greatly

expanded if the technology itself is extended to

other uses. If protocols involving the use of ESWL

on lower urinary stones, such as the one being

conducted at the University of Virginia, are successful, the possible uses of ESWL will expand still

further. An even more dramatic expansion of the

technology is its application to gallstones, which

afflict a larger number of patients in the United

States than do upper and lower urinary stones

combined (124 ).6 Extending ESWL applications to

gallstones does not necessarily mean that both

gallstones and urinary stones could be treated on

the same machine. At present, a separate ESWL

device specific to gallstones is a more realistic possibility; a gallstone lithotripter currently under development by Dornier has been tested on several

patients in West Germany, with some success

(147). It is not likely to reach clinical trials in the

United States for at least a year (125). Still, if

ESWL for gallstones became a reality in the near

future, it might provide justification for ESWL,

in some form, in most major population centers.

“In 1?83, 482,000 people mere discharged from U.S. non-Federal

acute care hospitals with a diagn[wis of gallstones, compared ~vith

330,000 people with a d]agnosis of Lidnel and ureter stones and

18,000 people with lower urinary stones ( 124}.
Appendixes
Appendix A

Acknowledgments and the

Health Program Advisory Committee

ACKNOWLEDGMENTS

The development of this case study was greatly aided by the advice of a number of people. The author

and other OTA staff would like to express their appreciation to the advisory panel on Payment for Physician

Services: Strategies for Medicare, to the Health Program

individuals:

Henry C. Alder

American Hospital Association

Chicago, IL

Charles R. Booth

Health Care Financing Administration

Baltimore, MD

Thomas W. Byrne

Blue Cross/Blue Shield of Massachusetts

Boston, MA

Gary Clisham

Medstone International, Inc.

San Diego, CA

Gerald Colvin

Health Systems Agency of Southwestern

Pennsylvania

Pittsburgh, PA

Thomas Dolan

Uro-Tech Management Corp.

Houston, TX

George Drach

University of Arizona

Tucson, AZ

Steven P. Dretler

Massachusetts General Hospital

Boston, MA

Bonnie Grogan

Northern California Kidney Stone Center

Los Gates, CA

Harry Heatherington

Health Care Financing Administration

Baltimore, MD

Alan Jenkins

University of Virginia Medical Center

Charlottesville, VA

Advisory Committee, and especially to the following

Cynthia P. King

American Medical Association

Chicago, IL

J. Kersten Kraft

Northern California Kidney Stone Center

Los Gates, CA

Charles Guidice

OCHAMPUS

Aurora, CO

Frederic C. Jacob

Davis, CA

Gerald McDonald

Veterans Administration

Washington, DC

Robert McDonough

Duke University

Durham, NC

William McGivney

American Medical Association

Chicago, IL

Diane Minear

Food and Drug Administration

Silver Spring, MD

Albert G. Mulley

Massachusetts General Hospital

Boston, MA

Daniel Newman

Methodist Hospital of Indiana

Indianapolis, IN

Eckhard Polzer

Dornier Medical Systems Inc.

Marietta, GA

89
90

Glenn M. Preminger

University of Texas Health Science Center

Dallas, TX

Martin I. Resnick

Case Western Reserve University

Cleveland, OH

William Shene

Monaghan Medical

Plattsburgh, NY

James Simpson

Western Center for Health Planning

San Francisco, CA

James Snipe

OCHAMPUS

Aurora, CO

Norman T. Welford

Food and Drug Administration

Silver Spring, MD

Richard Wild

Health Care Financing Administration

Baltimore, MD

James M. Young

Blue Cross/Blue Shield of Massachusetts

Boston, MA
91

HEALTH PROGRAM ADVISORY COMMITTEE

H. David Banta

Project Director

STG Project on Future Health Technology

The Netherlands

Rashi Fein

Professor, Department of

Health Policy

Harvard Medical School

Harvey Fineberg

Dean

School of Public Health

Harvard University

Michael Gough

Director

Risk Science Institute

Patricia King

Professor

Georgetown Law Center

Joyce C. Lashof

Dean

School of Public Health

University of California,

Alexander Leaf

Professor of Medicine

Harvard Medical School

Social Medicine and

Berkeley

Massachusetts General Hospital

Frederick Mosteller

Professor and Chair

Department of Health Policy and Management

School of Public Health

Harvard University

Norton Nelson

Professor

Department of Environmental Medicine

New York University Medical School

Robert Oseasohn

Associate Dean

School of Public Health

University of Texas

Nora Piore

Senior Fellow and Advisor to the President

United Hospital Fund of New York

Dorothy Rice

Regents Lecturer

Department of Social and Behavioral Sciences

School of Nursing

University of California, San Francisco

Richard Riegelman

Associate Professor

George Washington University

School of Medicine

Walter Robb

Vice President & General Manager

Medical Systems Operations

General Electric

Milwaukee, WI

Frederick C. Robbins

University Professor

Department of Epidemiology & Biostatistics

School of Medicine

Case Western Reserve University

Cleveland, OH

Frank E. Samuel, Jr.

President

Health Industry Manufacturers Association

Rosemary Stevens

Professor

Department of History and Sociology of Science

University of Pennsylvania
Appendix B

ESWL: Technical Background

Shock Waves

The Dornier extracorporeal shock wave lithotripter relies on the fundamental properties of shock waves

to function. Shock waves are characteristic of explosions and of supersonic flow of air over a body, such

as a jet. In ESWL, the source of the explosion is an

electrode which produces a spark. The mini-explosion

produces an instant rise in temperature and pressure

in the fluid immediately around the source of the

spark, causing the fluid to expand at supersonic speed.

A blast wave forms from this point, carrying the excess energy from the point of the explosion to distant

parts of the fluid (154).

Unlike sound waves, such as ultrasound waves,

shock waves are not sinusoidal periodic oscillations.

Instead, a graph of pressure vs. time shows a shock

wave as a single distinct peak that gradually decays.

This wave loses its energy less quickly if it travels

through an uninterrupted medium than an interrupted

one. Thus, the Dornier lithotripter employs a water

bath, so that the wave travels directly from the water

to the soft tissues of the body, which have similar

acoustic properties. Developers of other lithotripters,

such as the Medstone lithotripter, are experimenting

with a fluid-filled belt rather than an open bath.

To focus the wave on the stone, the lithotripter uses

a semi-ellipsoidal reflector around the tip of the electrode. The spark is generated at the focal point (fl)

of the reflector. The shock wave produced spreads in

a circular form, like a pebble dropped in a pond, until

it reaches the ellipsoidal wall. Each point of the ellipsoid wall becomes a generating point for a new circular wave. These wave fronts move outward again until they convene simultaneously at the second focal

point (f2), The stone is positioned at this second focal

point, the point of greatest force (22).

At the interface of the tissue and the stone, there

is a large difference in acoustic impedance. A large

pressure zone is created as the shock wave passes from

the tissue to the stone, and in this zone, the pressure

exceeds the strength of the stone material and causes

it to fragment and break. With the application of

repeated shock waves, the stone can be broken into

small fragments of less than 2 mm that can pass

through the urinary tract with the urine (187).

To ensure maximum efficiency for transmission of

the shock wave, the water in the water bath must be

treated. The Dornier lithotripter includes a water treatment system that softens, degasses, and regulates the

temperature of the water as it is exchanged between

92

the treatment of each patient. The water softening system removes soluble impurities from the water, which

purifies the water and adjusts its electrical conductivity. The water degassing unit removed dissolved gas

and bubbles in the water to ensure efficient wave transmission. The water temperature is kept near body temperature for the comfort and safety of the patient (187).

The Shock Wave Generating System

The shock wave in the Dornier lithotripter is generated by a spark from an underwater electrode. The

electrode has a positive and a negative point, is connected to a high-voltage generator, and is located at

the first focus of the brass semi-ellipsoid shell. When

the electrode is charged by the generator, it produces

a brief (1 microsecond) spark caused by the electrical

current across the electrode, The generator can be adjusted to produce power ranging from 18,000 to 24,000

volts (137). Thus, the strength of the treatment can

be varied in two ways: by the number of shocks given

(as few as 500 to as many as 2,500 or more), and the

force of the shocks, which varies by the voltage.

The generator is coupled to an electrocardiogram,

which synchronizes the shock wave with the patient’s

heart beat. The voltage generator can only be activated

when the heart is contracting and is refractory to external stimuli (the time after the QRS peak in the electrocardiogram recording) (187).

An electrode is not the only possible method of

producing an extracorporeal shock wave. A laser is

another potential form of energy that can produce the

mini-explosion that, in turn, produces the shock wave.

At least one American firm, International Biomedics,

is developing a laser-driven lithotripter (172). Its potential benefits include a cheaper source of energy; the

present electrodes used in the Dornier lithotripter cost

$180 or more apiece, and a single treatment may use

two or three electrodes.

The Stone Location System

The Dornier lithotripter uses fluoroscopic (X-ray)

imaging to locate the stone. Since the second focus of

the ellipsoid, where the shock waves converge, is only

a 1.5 cm3 area, efficient destruction demands that the

stone be pinpointed accurately. The Dornier device includes two independent X-ray systems positioned so

that their beams cross. The patient is adjusted, using

a mechanical positioning system, until the stone to be
93

fragmented lies at the point of this intersection. At any

time during the procedure, the lithotripsy operator can

activate the X-ray scanning system briefly and get an

updated picture of the stone (22). If the stone has

moved in the course of the treatment, as it frequently

does, the patient can be immediately adjusted so that

the stone again lies at the intersecting point, and treatment can continue.

During the development of the device, Dornier experimented with ultrasound imaging to locate the

stone. A major advantage of ultrasound is its safety

relative to fluoroscope, since it does not produce ionizing radiation. However, Dornier was unable to develop a system that could image the stone adequately

for precise location purposes (22). Dornier itself is still

investigating the potential of ultrasound imaging (126),

and at least two other ESWL developers (Northgate

and EDAP ) are also experimenting with ultrasound

( 153).

Patient Preparation

Many of the patient preparations associated wit h

surgery are not necessary for ESWL. Patients may be

given a laxative before treatment to eliminate any intestinal gas, which can interfere with the location of

the stone during the procedure (24 ). Anesthesia is necessary, although either regional or general anesthesia

can usually be used; preferences vary by center. In the

first six U.S. hospitals with ESWL, as of May 1985,

approximately 47.5 percent of patients had undergone

regional (spinal or epidural) anesthesia, and the remaining 52.5 percent had undergone general anesthesia (11 ). Preferences among centers varied considerably, however; use ranged from only 10 percent general

anesthesia at Charlottesville to 100 percent general

anesthesia at Gainesville (11). The option of using regional rather than general anesthesia is one of the factors that increases the safety of ESWL relative to open

surgery for certain patients.

Some patients, such as those with staghom or ureteral

stones, require adjunct procedures before or after

ESWL. Ureteral stones, for example, can be manipulated up into the pelvis of the kidney before ESWL

treatment, where there is more space for the stone to

break up (105). In these patients, catheterization before ESWL treatment is often performed in an attempt

to move the stone into the kidney. Patients with infected stones also require some additional pretreatment

preparation, such as the administration of antibiotics

1 or 2 days before treatment (24). Finally, patients with

stones of insufficient contrast density to be visualized

adequately on X-rays may require the injection of a

contrast medium before the procedure (24).
Appendix C

Coding Systems

The CPT-4 Coding System

for Physician Services

Two widespread systems for codifying medical diagnoses and procedures exist in the United States: the

Physicians’ Current Procedural Terminology, Fourth

Edition (CPT-4), which codes procedures performed

by physicians, and the International Classification of

Diseases, Ninth Revision, Clinical Modification (ICD9-CM), which codes hospital diagnoses and procedures

(9,188).

CPT-4 is a detailed list of five-digit codes for physician services, organized according to organ systems,

that was developed (and is maintained) by the American Medical Association (AMA). It was initially developed to facilitate physician reporting on claim

forms, and Medicare recently began requiring that

physician bills be based on a version of this system.

CPT has undergone numerous expansions, and the

number of codes increased from 2,084 in 1966 to 7,040

in 1985 (182).

These codes may be clarified with modifiers under

certain circumstances. For example, the CPT-4 manual states:

[Certain procedures are a combination of a physician

component and a technical component. When the physician component is reported separately, the service

may be identified by adding the modifier ‘-26’ to the

usual procedure number or the service may be reported

by use of the five digit modifier code 09926 (10)].

This reporting procedure is the mechanism through

which a radiologist, for example, may get paid a

“professional component only” charge for interpreting an X-ray in a hospital and a total charge (including an implicit or explicit “technical fee”) for an officebased X-ray, where the equipment is owned by the

physician.

Because CPT-4 is entirely under the aegis of AMA

and is updated annually, the advent of extracorporeal

shock wave lithotripsy (ESWL) created no structural

difficulties for this coding system. A new code to represent ESWL performed by a physician, 50590, has

been created.

The ICD-9-CM Coding System

for Hospitals1

The diagnosis-related groups (DRGs) used by Medicare’s prospective payment system to categorize

patients for reimbursement purposes are based on a

coding system known as ICD-9-CM. This system has

two parts, The first and largest part is a comprehensive

list of diseases with corresponding codes. It is compatible with the World Health Organization’s (WHO’s)

list of disease codes, maintained for statistical purposes, and is updated along with the WHO list every

10 years. The second part of ICD-9-CM contains procedure codes. These are independent of the disease

codes and are not directly based on an international

system, although in the past they have been revised

concurrently with the disease codes. The National Center for Health Statistics is the official WHO coding

liaison in the United States, but the development and

maintenance of the American version of ICD has historically been a cooperative effort of representatives

from a variety of governmental agencies and professional organizations (70). The codes have historically

been infrequently updated, and until very recently

there was no established formal procedure for interim

addition of codes or assignments of new diseases and

procedures to existing codes. In late 1985, as a result

of the dilemmas and uncertainties arising out of coding

and DRG classification, a formal ongoing coding recommendations task force, jointly chaired by the National Center for Health Statistics and Health Care

Financing Administration and including representatives of the major interested organizations, was established (50 FR 24374).

The ICD-9-CM codes are organized according to

organ system (circulatory system, digestive system,

etc. ), with additional sections for subjects such as

infectious diseases and accidental injury. Diseases are

I Port Ions ot th]> w( t ion are exerpted trom L I S ~’(~ngre~i, Ott Ice 01 TM hnolog}r” Assessment, NfdicaresProspe( t]~’e [’a~’ment S}’5tem Sfrategjes for

E\r~luat{ng Cost Qual)f}, ,]rrd ,tfecf]cal Te(hnolog}’,” ~>~A-H-202 ~\l’a\hlngton, I )C U S (l)vt,rnment I)nntmg Of t]ce, October I 985 I

94
95

assigned three-digit codes, with fourth and occasionally fifth digits available to allow more specificity.

For instance, hereditary anemia is code 282. Sicklecell anemia, one type of hereditary anemia, is code

282.6, and the particular form called sickle-cell/Hb-C

disease is further specified as code 282.63. The procedure codes are organized in a fashion similar to the

disease codes, except that maximium specificity is

reached at four digits rather than five. Table C-1 lists

some ICD-9-CM codes relating to urinary stones.

The process of DRG assignment depends on both

the diagnosis and procedure codes. The code for the

principal diagnosis places the patient in a major diagnostic category and indicates which of several DRGs

might be appropriate. The code for the principal procedure (or its absence) is used to determine whether

the appropriate DRG is a medical or a surgical one.

Surgical DRGs generally have higher reimbursement

rates than medical ones. The final choice of DRG then

depends on the specific procedure performed, the patient’s age, and the presence or absence of coexisting

diseases and complications.

The ICD-9-CM coding system, designed for clinical

and statistical purposes, presents several problems

when used as a basis for reimbursement (70,80,164).

First, if inaccurate or inadequate coding was frequent

when the DRGs were designed, many hospital cases

may have been inaccurately classified. If this is the

case, the DRG weights may consequently be inaccurate

themselves. Second, some medical conditions can be

described by more than one diagnostic code (80). Although any of several diagnoses may be technically

correct, their associated codes lead to different DRGs

with different weights.

A third major concern regards the procedure codes.

Procedures utilizing new technologies may not be

appropriately described by any of the current codes,

and confusion about which code to use can lead to

wide variation in DRG assignment. The code that

seems most applicable may lead to an apparently

inappropriate DRG; conversely, a DRG with an apparently appropriate reimbursement rate may be based

on codes entirely unfitting to the new technology.

Coding consultants at the American Hospital Association and the Commission on Professional and Hospitable C-1 .—ICD-9-CM Codes Relating to

Urinary Stones

Diagnostic codes:

592 Calculus (stone) of kidney and ureter

592.0 Calculus of kidney

592,1 Calculus of ureter

592.9 Urinary calculus, unspecified

594 Calculus (stone) of lower urinary tract

594.0 Calculus in diverticulum of bladder

594.1 Other calculus in bladder

594.2 Calculus in urethra

594.8 Other lower urinary tract calculus

594.9 Calculus of lower urinary tract, unspecified

Procedure codes:

55 Operations on kidney

55.0 Nephrotomy and nephrostomy

55.01 Nephrotomy (includes removal of stones

from kidney)

55.02 Nephrostomy

55.1 Pyelotomy and pyelostomy

55.11 Pyelotomy (includes removal of stones from

renal pelvis)

55.12 Pyelostomy

55.9 Other operations on kidney

55.99 other

56 Operations on ureter

56.0 Transurethral removal of obstruction from ureter

and rend pelvis

56.2 Ureterotomy (includes removal of ureter stone

through incision)

57 Operations on urinary bladder

57.0 Transurethral clearance of bladder

57.1 Cystotomy

57.19 Other cystotomy (includes removal of bladder stone through incision)

58 Operations on urethra

58.0 Urethrotomy (includes removal of stone in urethra

through incision )

58.6 Dilation of urethra (includes removal of calculus

without incision)

59 Other operations on urinary tract

59.9 Other operations on urinary system

59.95 Ultrasonic fragmentation of urinary stones

59.99 Other

tal Activities help to reduce confusion and promote

coding uniformity, Major problems of coding assignment are now the responsibility of the newly organized

task force.

59-9{)1 () - 86 - 5 : QI 3
Appendix D

Glossary of Terms and Acronyms

Glossary of Terms

Access: Potential and actual entry into the health care

system.

Ambulatory services: Medical services provided to patients who are not hospitalized.

Ancillary services or technology: Medical services or

technology used directly to support basic clinical

services, including diagnostic radiology, radiation

therapy, clinical laboratory, and other special

services.

Approved charge (Medicare): An individual charge determination made by a Medicare carrier on a covered Part B medical service or supply. In the absence

of unusual medical circumstances, it is the lowest

of: 1) the physician’s or supplier’s customary charge

for that service, 2) the prevailing charge for similar

service in the locality (adjusted if necessary by the

Medicare Economic Index), 3) the actual charge

made by the physician or supplier, and 4) the carrier’s private business charge for a comparable service. Also called “allowed charge” or “reasonable

charge. ”

Bladder: See urinary bladder.

Cavitation payment method: A method of paying for

medical care by a prospective per capita payment

that is independent of the number of services received.

Carrier (Medicare): Organizations, typically Blue

Shield plans or commercial insurance firms, under

contract to the Health Care Financing Administration for administering Part B of the Medicare program. Their tasks include computing reasonable

charges for physician services, making actual payments, determining whether claims are for covered

services, denying claims for noncovered services,

and denying claims for unnecessary use of services.

Case mix: The relative frequency of admissions of various types of patients, reflecting different needs for

hospital resources. There are many ways of measuring case mix, some based on patients’ diagnoses

or the severity of their illnesses, some on the utilization of services, and some on the characteristics

of the hospital or area in which it is located.

Catheter: A tubular instrument, often with specially

designed tips, used for discharging fluids or for distending a passage. A catheter is frequently placed

in the urinary tract of patients with stones to aid

in the passage and discharge of urine, stone fragments, or small whole stones.

Certificate-of-need (CON): A regulatory planning

mechanism required by the National Health Planning Resources Development Act of 1974 (Public

Law 93-641) to control expenditures for and distribution of expensive medical care facilities and

equipment. CON applications by institutions are reviewed by local health systems agencies, who recommend approval or disapproval; they are denied

or approved by State health planning and development agencies.

Coinsurance: That percentage of covered hospital and

medical expenses, after subtraction of any deductible, for which an insured person is responsible. Under Medicare Part B, after the annual deductible has

been met, Medicare will generally pay 80 percent

of approved charges for covered services and supplies; the remaining 20 percent is the coinsurance,

which the beneficiary pays.

Colic: Severe pain.

Coverage (Medicare): In the Medicare program, coverage refers to the benefits available to eligible beneficiaries and can be distinguished from payment,

which refers to the amount and methods of payment

for covered services.

Current Procedure Terminology, Fourth Revision

(CPT-4) Coding: A taxonomy of procedures performed by physicians that is used for recording and

billing for service rendered. This taxonomy has been

incorporated in the HCFA Common Procedure Coding system, which all Medicare carriers are now required to use.

Customary charge (Medicare): In the absence of unusual medical circumstances, the maximum amount

that a Medicare carrier will approve for payment

for a particular service provided by a particular physician practice.

Customary, prevailing, and reasonable charges: The

method used by Medicare carriers to determine the

approved charge (see definition) for a particular Part

B service from a particular physician or supplier.

Deductible: An initial expense of a specified amount

of approved charges for covered services within a

given time period (e.g., $75 per year) payable by

an insured before the insurer assumes liability for

any additional costs of covered services. The Medicare Part B deductible is the portion of approved

charges (for covered services each calendar year) for

which a beneficiary is responsible before Medicare

assumes liability.

96
.—9 7 —

Diagnosis-related groups (DRGs): Groupings of diagnostic categories drawn from the International Classification of Diseases and modified by the presence

of a surgical procedure, patient age, presence or absence of significant comorbidities or complications,

and other relevant criteria. DRGs are the case-mix

measure mandated for Medicare’s prospective hospital payment system by the Social Security Amendments of 1983 (Public Law 98-21).

Fee-for-service payment: A method of paying for medical care in which each service performed by an individual provider can bear a related charge.

Fee schedule: An exhaustive list of physician services

in which each entry is associated with one specific

monetary amount representing the approved payment for a given insurance plan.

Hematuria: The discharge of blood in the urine.

Idiopathic: Of unknown origin.

Incidence: The number of newly diagnosed cases of

a condition over a specified period of time, usually

a year.

Inpatient services: Services provided to patients who

are hospitalized.

Intermediaries (Medicare): Organizations, typically

Blue Cross plans or commercial insurance firms,

under contract to the Health Care Financing Administration for administering Part A of the Medicare

program. Their tasks include determining reasonable

costs for covered items and services, making payments, and guarding against unnecessary use of covered services for Medicare Part A payments. intermediaries also make payments for home health and

outpatient hospital services covered under Part B.

International Classification of Diseases, Ninth Revision, Clinical Modification (ICD-9-CM) Coding: A

two-part system of coding patient medical information used in abstracting systems and for classifying

patients into DRGs for Medicare. The first part is

a comprehensive list of diseases with corresponding codes compatible with the World Health Organization’s list of disease codes. The second part contains procedure codes, independent of the disease

codes.

Lithotripsy: Stone destruction.

Lithotripter: An instrument that fragments, erodes, or

otherwise destroys stones in the body.

Medical technology: The drugs, devices, and medical

and surgical procedures used in medical care, and

the organizational and support systems within

which such care is provided.

Nephrectomy: The surgical removal of part of the

kidney.

Nephrolithotomy: The surgical removal of a stone

from the kidney.

Nephrotomy: A surgical incision into the kidney.

Nephrostomy: The establishment of a passageway

through the body to the kidney.

Opportunity cost: In economics, defined as the return

available from the best alternative use of a particular resource, for example, the value of the other

products that might otherwise have been produced

by the resources used in the production of a particular good or service, Any single opportunity taken

will have a cost in terms of an opportunity forgone.

Part A (Medicare): Medicare’s Hospital Insurance program, which provides insurance benefits against the

costs of hospital and related posthospital services

for elderly and disabled beneficiaries. Part A, which

is an entitlement program for those who are eligible, is available without payment of a premium, although the beneficiary is responsible for an initial

deductible or copayment for some services. Those

not automatically eligible for Part A may enroll in

the program by paying a monthly premium.

Part B (Medicare): Medicare’s Supplementary Medical Insurance program, which provides insurance

benefits for medically necessary physician services,

hospital outpatient services, outpatient physical

therapy and speech pathology services, comprehensive rehabilitation facility services, and various other

limited ambulatory services and supplies such as

prosthetic devices and durable medical equipment.

Part B also covers home health services for those

Medicare beneficiaries who have Part B coverage

only. Part B is optional and requires payment of a

monthly premium. The beneficiary is also responsible for a deductible and a coinsurance payment for

most covered services.

Percutaneous: Literally, “through the skin”; refers to

a surgical procedure that requires only a very small

incision. In percutaneous nephrostolithotomy, a kidney stone is removed through a small incision and

a channel to the stone, with endoscopic assistance,

rather than through a large incision.

Prevailing charge (Medicare): In the absence of unusual medical circumstances, the maximum amount

a Medicare carrier will approve for payment for a

particular service provided by any physician practice within a particular peer group and locality. Generally, this amount is equal to the lowest charge in

an array of customary charges that is high enough

to include 75 percent of all the relevant customary

charges.

Prospective payment: Payment for medical care on the

basis of rates set in advance of the time period in

which they apply. The unit of payment may vary

from individual medical services to broader categories, such as hospital case, episode of illness, or person (cavitation).

Prospective Payment Assessment Commission
98

(ProPAC): A commission established by the same

law that created the DRG-based prospective payment system for Medicare (Public Law 98-21) to

make recommendations to the Secretary of Health

and Human Services on the annual update factor

and on adjustments of DRG classifications and

weights.

Pyelolithotomy: The surgical removal of a stone from

the renal pelvis.

Quality of care: The degree to which actions taken or

not taken maximize the probability of beneficial

health outcomes and minimize risk and other untoward outcomes, given the existing state of medical science and art.

Reasonable and necessary services (Medicare): Criteria

used to determine what services are eligible for

Medicare reimbursement. For some services, HCFA

specifically allows or denies coverage; for other services, Medicare carriers and intermediaries themselves determine coverage policy.

Reasonable charge: See approved charge.

Renal: Pertaining to the kidney.

Renal calix: One of the finger-like projections of the

renal pelvis that collect filtered urine and channel

it into the kidney’s core.

Renal pelvis: The hollow core of the kidney.

Staghorn stone: A large kidney stone that fills several

calices, giving it a dramatic “staghorn” appearance

in X-rays.

Struvite stone: A urinary stone composed of magnesium ammonium phosphate and associated with urinary tract infection.

Third-party payment: Payment by a private insurer

or government program to a medical provider for

care given to a patient.

Transurethral: Through the urethra. Refers to treatment procedures that use instruments passed up the

urinary tract, rather than through a surgical incision.

Ureter: One of the two tube-like structures that carry

urine from the kidneys to the bladder.

Ureterolithotomy: The surgical removal of stones from

the ureter.

Urethra: The structure through which urine passes

from the bladder out of the body.

Urinary bladder: The structure that collects urine from

the ureters and stores it until urination.

Urinary tract: The organ system that consists of the

kidneys, ureters, bladder, and urethra.

Glossary of Acronyms

AHA —American Hospital Association

ALOS —average length of stay

AMA —American Medical Association

AMI —American Medical International

ASC —ambulatory surgical center

AUA —American Urological Association

CFR —Code of Federal Regulations

CHAMPUS—Civilian Health and Medical Program

CON

CPHA

CPT

CT

DOD

DRG

DHHS

ESWL

FDA

FR

HCA

HCFA

ICD-9-CM

IDE

IHS

MRI

NCHS

NME

OHTA

PPS

ProPAC

R&D

VA

VHA

WHO

of the Uniformed Services (DOD)

—certificate of need

–Commission on Professional and

Hospital Activities

—current procedural terminology

—computed tomography

—Department of Defense

–diagnosis-related group

—Department of Health and Human

Services

—extracorporeal shock wave lithotripsy

—Food and Drug Administration

—Federal Register

—Hospital Corporation of America

—Health Care Financing

Administration (DHHS)

—International Classification of

Diseases, 9th Revision, Clinical

Modification

—investigational device exemption

—Indian Health Service

—magnetic resonance imaging

—National Center for Health Statistics

—National Medical Enterprises

—Office of Health Technology

Assessment (Public Health Service)

—prospective payment system

—Prospective Payment Assessment

Commission

—research and development

—Veterans Administration

—Voluntary Hospitals of America

—World Health Organization

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u . s. GOVERNMENT PRINT ING OFF ICE : 1986 0 - 59-961 : QL 3